Business

Authors: By Paul Krugman Source:Record, The (Kitchener/Cambridge/Waterloo, ON), 08/09/2011 Accession Number:Q4K214140035311 Database:regional Business News A CREDIBILITY GAP GIVEN historical PERFORMANCE, CAN STANDARD & angstrom unit; POORS BE evaluate TO RATE ANYTHING RIGHT? To understand the furor over the termination by Standard & miserables, the rating situation, to downgrade U.S. government debt, you have to hold in your mind 2 seemingly (but not actually) contradictory ideas. The first is that the United States is thitherfore no longer the stable, reliable country it once was. The befriend is that Standard & Poors itself has even lower credibleness; its the last place anyone should turn for ideals about the nations prospects. allows start with Standard & Poors lack of credibility. If theres a single word that best describes the rating agencys decision to downgrade America, its chutzpah - traditionally defined by the example of the young man who kills his parents, then pleads for mercy because hes an orphan. Americas large budget deficit is, after all, earlier the result of the economic slump that followed the 2008 financial crisis.

And Standard & Poors, along with its sister rating agencies, played a major role in causing that crisis, by with child(p) AAA ratings to mortgage-backed assets that have since turned into toxic waste. Nor did the bad judgment stop there. Notoriously, Standard & Poors gave Lehman Brothers, whose collapse triggered a global panic, an A rating right up to the calendar month of its demise. And how did the rating agency react after this A-rated firm went demote? By issuing a report denying that it had done anything wrong. So these people are now pronouncing on the credit rightness of the United States of America? Wait, it gets better. Before downgrading U.S. debt, Standard & Poors sent a preliminary draft of its news run to the U.S. Treasury. Officials there quickly spotted a $2 one thousand thousand error in Standard & Poors... If you deprivation to get a full essay, order it on our website: Orderessay

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