Sunday, August 7, 2011

Shoot the Messenger

Listen to the outcry! The politicians have now decided that Standard and Poor is to blame for the near term financial chaos. Those evil folks at S&P should not have downgraded US debt (or not used the "process" that they used to downgrade US debt).

These are the same politicians who complained when the rating agencies were late to the party in the 2007-2008 crisis. Many of of these politicians blamed the rating agencies as contributors to that crisis, when they failed to downgrade weak debt.

So....damned if you do, damned if you don't. What does this tell you? It tells you that politicians (and central bankers) are looking for someone to blame for their own mistakes.

In both cases, the same facts prevail. Government created the current crisis just as surely as government created the 2007-2008 crisis. Politicians, who are mainly to blame, look for others to blame.

This "shoot the messenger" strategy is followed by both US and European politicians and central bankers alike. That strategy, they hope, will keep the public from the real truth -- the US and Europe are drowning in sovereign debt and have taken no steps to deal with the problem.

So, here they go again....blame the rating agencies.

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