There will be endless debate on whether S&P was justified in stripping America of its AAA rating. But this historic action has now taken place, and the global system must adjust. There are consequences, uncertainties, and a silver lining.
No sooner did the president and Boehner announce their agreement than the stock market fell dramatically. The all-knowing Stock Exchange, that Delphic Oracle of their cult, has looked upon their handiwork... and frowned.
S&P knows exactly what it is, and so should everyone else. It's the for-profit company which, while masquerading as an "agency," bartered its coveted AAA ratings for increased profits. The real question is why?
It will come down to the wire; and when the stopgap compromise is reached, many in Washington will declare victory and claim credit for averting a national disaster. Yet the resolution will likely be temporary, and the damage will be real and long-lasting.
Legislative and media attention is rotating from health care to financial reform. Yet few are talking about the balance sheet of the Federal Government. Historically they don't. We have seen this story unfold before.