So a U.S. Treasury agent caught a 2 trillion dollar mistake by the S&P as the S&P was set to downgrade the U.S. credit rating. The response from S&P? "Who cares?"
"It was reportedly John Bellows who noticed within minutes that S&P had made a glaring error that placed its calculations about the U.S. deficit off by about $2.1 trillion.
Treasury Secretary Tim Geithner quickly pushed back at S&P, pointing to the error. The agency acknowledged its mistake, then said it was charging ahead with the ratings change anyway. Later that evening, it officially downgraded American debt."
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"After spotting the error, he took to the Treasury Department blog Saturday to blast S&P’s decision in dry but biting language. “After Treasury pointed out this error—a basic math error of significant consequence—S&P still chose to proceed with their flawed judgment by simply changing their principal rationale for their credit rating decision from an economic one to a political one,” he wrote."
"Republicans in the Senate have pledged to block many of those nominated for government posts by President Obama, including dozens of top economic jobs. For many, the most absurd example is Peter Diamond, who despite holding a Nobel Prize in economics was forced to withdraw his nomination to the Federal Reserve Board of Governors due to Republican holds that prevented his confirmation. But while those fights get sporadic attention, the result is that officials like Bellows take over top jobs on interim bases that end up stretching on for months and months."
Meanwhile, on Wednesday, this report was issued - the deficit is less than predicted already:
"The Treasury Department on Wednesday reported the nation has run a $1.099 trillion budget deficit through July.
The deficit is about $70 billion less than last year's budget deficit at this point in the fiscal year. The reason is higher government revenues, the Treasury statement said.
Total spending has increased this year from $2.921 trillion to $2.992 trillion, but receipts to the government are up from $1.753 trillion to $1.893 trillion."
The fiscal meltdown on the global scale seems to point to a daunting conclusion:
"The only sane conclusion is to open our eyes to the fact that finance capital is now bigger than the state. Sovereigns are limited by territory. Capital is not. Thus it can engage in what is known as regulatory arbitrage, seeking out the markets with the fewest restrictions and playing governments off each other to compete for the most favorable -- defined as the most lax -- regulatory environment, much as sports franchises extort tax breaks from municipalities with threats of moving to another city. That Lending Tree TV ad that's been around for years promises "when banks compete, you win." Well, when governments compete for regulatory permissiveness, you lose. Behold the recent spectacle of the New York Democratic congressional caucus asking federal regulators not to enforce new controls over derivatives, the most speculative, destabilizing and profitable line in the business, because it could hurt Wall Street’s competiveness against foreign banks."
Which reminded me of this exchange from a 1998 episode of "The Simpsons":
"Mr. Burns: Well, if it's a crime to love one's country, then I'm guilty. And if it's a crime to steal a trillion dollars from our government and hand it over to communist Cuba, then I'm guilty of that too. And if it's a crime to bribe a jury, then so help me, I'll soon be guilty of that!
Homer Simpson: God bless America!
