Sunday, August 14, 2011

Hsieh PJM OpEd: Don't Shoot the Downgrade Messenger

By Paul Hsieh

The 8/10/2011 PajamasMedia has just published my latest OpEd, "Don't Shoot the Downgrade Messenger".

My theme is that attacking S&P for the U.S. credit downgrade is like criticizing your doctor for diagnosing your cancer. Here is the opening:

Suppose you saw your doctor for a persistent headache. After performing a full battery of tests, he told you that your MRI scan showed a malignant brain tumor. Would you (1) work with him on a plan to treat your cancer, or (2) threaten the MRI manufacturer with a government investigation? Although most normal people would choose option 1, our government is responding to the news of the S&P credit downgrade with option 2.

The Senate Banking Committee has responded to S&P's downgrading of the U.S. government's credit rating by "gathering information" in preparation for possible formal hearings on S&P's action. Committee Chairman Tim Johnson (D-S.D.) called S&P’s move "irresponsible" because it would make it more difficult for cash-strapped state and local governments to borrow more money. In other words, the problem wasn't the fact that the federal, state, and local governments were borrowing money that might not ever get paid back. Rather, the problem was that S&P was pointing out that fact to the rest of the world.

Unfortunately, our government's tactic of blaming the messenger has been all too common these past few years...
(Read the full text of "Don't Shoot the Downgrade Messenger".)

The unrest in Great Britain and Greece are a wakeup call to America as to what to expect if we continue on our current unsustainable welfare-state spending spree. Let's hope Americans take heed before it's too late.

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