S&P’s arbitrary arithmetic

It’s easy to get yourself into a corner if you make decisions without a sound basis. More than that, it’s really hard to change your mind if there was never a basis for the decision in the first base. Or if you don’t want to be honest about what the basis is.

What am I on about? The S&P’s downgrading of the US was political not economic. Whatever credibility they have left after the AAA rating of defaulting (and inherently likely to default) CDOs is now gone.

S&P showed their lack of understanding of US budgetary processes by mis-estimating the value of the spending cuts by $2 trillion. And when corrected, simply changed the rationale for the downgrading.

Yes, much of this comes from Paul Krugman.  I don’t pretend to understand the US budgeting process (yet) but at least I know that I don’t know.

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