Who are the grey men who decide America's status?
America is living through torn times.
Torn by the wasting war in Afghanistan – make no mistake, the loss of more than thirty Special Services personnel, some of whom were from the very squadron that killed Bin Laden is desperate news in a country that is so interwoven with the military. Torn too by the Standard and Poor’s downgrading of America’s prized AAA rating.
On the one hand, the country is dismayed and jolted by S&P’s move. Jolted by the recognition that their country is in serious debt and that there is no quick fix means of remedying it.
Worse, Communist China no less, has told Washington, in no uncertain terms, to “get your house in order“. It is both humiliating, and worrying, and speaks to many here in the US of a tomorrow they never dreamt would come.
A tomorrow in which some one else flexes bigger economic muscle than the USA for the first time since the nineteenth century. That tomorrow is not immediate, but to hear many here, it feels horribly possible.
But America is also perplexed by who these ratings people actually are. S&P is only one of three key rating agencies that vet the US’s credit worthiness. The other two have sustained America’s top notch status. But who are the “grey men” who decide this stuff for S&P? People are beginning to ask.
For in their draft assessment of the US economy sent to the US Treasury before publishing the downgrade, S&P made – according to the US Treasury – a staggering error of some $2 trillion MORE than the debt actually added up to.
We are told the discrepancy was resolved in a phone call. If S&P can be so wrong about so critical a sum, what else can they get wrong?
Well most notoriously the credit worthiness of Lehman Brothers shortly before they hit the wall. But don’t stop there. This is one of the agencies that rated the CDOs that underpinned the sub prime mortgage disaster in 2008 as AAA status.
Perhaps in the end it matters not who S&P are and whether they are any more reliable than anyone else in judging an economy or a financial instrument. Perhaps in reality, the American people were waiting for nurse – any nurse – to tell them their economy was as sick as their daily experience told them it was.
Then, goddamnit (as they say here in the US) the unemployment figures were better than anyone forecast, just. Maybe nurse, who is now known to get things wrong, got this wrong too.
Alas for Mr Obama, not many people believe that. So he is left on deck at the moment most American learned what a downgrade was. That emotional experience – being downgraded overwhelmed any residual worries about either nurse’s identity or her integrity.
Follow Jon Snow on twitter: @jonsnowc4