Downgrade!

S&P does the deed, despite the arithmetic. The problem isn’t economic, it’s political.

Standard and Poor, which continued to rate various junky derivatives AAA until they went into default, has downgraded the debt of the United States of America. This can’t be based on the possibility that the government will be unable to pay its debt – after all, the debt is in dollars, and we own the printing press – but rather on the possibility that the hostage-takers in the GOP caucuses in Congress will eventually decide to shoot a hostage, forcing the government into default. The other agencies are holding steady.

Even a minor increase in Treasury borrowing rates will do large damage to the world economy. Thank you, John Boehner. Thank you, Mitch McConnell. Thank you, Pete Peterson. Thanks are also due to the Koch Brothers and their useful idiots in the Teahadi movement. Let’s say it now: their actions have, from the beginning, been as unpatriotic as those of any important American political force since Secession.

But it’s also worth noticing that the analysis S&P gave the Treasury when it warned about its plan to downgrade was off by $2 trillion. The Treasury pointed out the error. Apparently that didn’t matter; S&P had decided to downgrade and went right ahead. After all, what’s $2T among friends?

Is it just possible that some S&P employees had shorted Treasuries, or something else likely to get hit? It appears that part of the explanation for yesterday’s stock-market crash was that word of the possible downgrade had leaked.

Might this be a good time for a serious investigation into the ratings-agency racket?

Footnote Just this once, could Barack Obama allow himself to become visibly, righteously angry at the people who have brought the national honor into question?