I understand that yesterday's market crash wasn't all about Standard & Poors downgrade of the U.S. credit rating to AA from AAA. However, let me get my facts straight. None of the other bond raters downgraded U.S. debt. So all of this Sturm und Drang about our credit rating is based on S&P, a company that was so wrong and misguided about mortgage securities leading up to the U.S. housing boom that they might as well not have done any rating at all. (See Nate Silver's "Why S.&P.’s Ratings Are Substandard and Porous" for more detail on exactly how fucked up S&P is.) And because we as a country failed to really fix any of the problems leading up to the housing boom - including a lack of rating agency reform - this same company whose misjudgments helped spark the housing boom is now helping to spark what many folks are calling "the great recession." Oy.
If I have any misunderstandings about the situation, please let me know. But from where I sit, the whole situation smells rotten, and as usual, it's the normal folks who end up footing the bill for the misfeasance of these corporate fools.
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