The trigger that apparently caused the market meltdown was the ever-so-slight suggestion from Standard & Poor's that the US government's fiscal health might not be all that it is cracked up to be.
This was not a case of the little boy noting the emperor has no clothes. It is more like the little boy suggested that the emperor's clothes, while beautiful, might have been more carefully tailored to suit the imperial dignity. Hysteria followed, and the entire Obama cult called for the kid to be stoned.
Finally the emperor himself spoke in defense of his rainment. That's when the market crashed.
But the downgrading of a government's debt from AAA to AA+ can only have triggered a market avalanche if the truth is in fact much worse, and most everyone knows it.
S&P doesn't have clean hands, of course. It holds a government monopoly, wants higher taxes, and rated crazed housing bonds AAA. But imagine, for just a moment, that US government debt were rated in the same way that municipal bonds or regular corporate debt are. Imagine that government bonds, like normal bonds, carried a default premium. Imagine, in other words, that the Federal Reserve were not in a position to pay everyone from welfare recipients to banksters with newly created money.
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This was not a case of the little boy noting the emperor has no clothes. It is more like the little boy suggested that the emperor's clothes, while beautiful, might have been more carefully tailored to suit the imperial dignity. Hysteria followed, and the entire Obama cult called for the kid to be stoned.
Finally the emperor himself spoke in defense of his rainment. That's when the market crashed.
But the downgrading of a government's debt from AAA to AA+ can only have triggered a market avalanche if the truth is in fact much worse, and most everyone knows it.
S&P doesn't have clean hands, of course. It holds a government monopoly, wants higher taxes, and rated crazed housing bonds AAA. But imagine, for just a moment, that US government debt were rated in the same way that municipal bonds or regular corporate debt are. Imagine that government bonds, like normal bonds, carried a default premium. Imagine, in other words, that the Federal Reserve were not in a position to pay everyone from welfare recipients to banksters with newly created money.
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