The verdict

S&P Tells Biggest Debtor Don’t Blow Final Act: Caroline Baum

"Rarely has a credit rating company made such an astute observation of the human condition.
“We believe there is a material risk that U.S. policy makers might not reach an agreement on how to address medium-and long-term budgetary challenges by 2013,” Standard & Poor’ssaid on assigning a negative outlook to the U.S. AAA-credit rating Monday.
Any observer of the budget debate in Washington would have to believe there’s a material risk, too.
The U.S. Treasury, aware that any rise in interest ratesfrom increased credit risk would further damage its fiscal position, was quick to counter S&P’s shot across the bow. The negative outlook “underestimates the ability of America’s leaders to come together” to solve the debt problem, Assistant Secretary for Financial Markets Mary Miller said.
Come together? Miller must be watching a different theatrical production than I am. Treasury Secretary Tim Geithnerwas shuttled off to TV business channels yesterday to tell us that, unlike S&P, his outlook on the U.S. fiscal situation isn’t negative.
Take a look at the first four acts of this drama, and you decide who’s right..."
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Comment: Modern politics has its own logic which means that there is a permanent pressure for governments to spend and in particular to spend borrowed money. At least 90 per cent of our current problems in politics are of systemic nature.