Badly burned for not warning investors about the last market crash, Standard & Poor's has done everything in its power to assure it's at the forefront of this one. And, that includes igniting the flame to set it off.
I'm not a market watcher, but I do know a little about image and reputation. And, it's crystal clear to me that, despite a $2 trillion miscalculation in its math this past Friday, S&P decided to go ahead and issue its ratings downgrade anyway. They did so citing political polarization as their rationale . But, that's pure posturing on their part. S&P knows as much about politics as this blogger knows about nuclear fission.
It was image and reputation repair that drove their reckless decision. Now, as a result, they've got an even bigger image and reputation problem than ever.
Back in 2008, S&P was asleep at the wheel. In 2011, they were responsible for stepping on the pedal and accelerating to 120 mph around a hair-pin turn.
Long after the market recovers and the economy improves, S&P will be remembered for botching two separate crises. In fact, if I were writing a book about the first, I'd borrow a page from Jack Kennedy's inaugural tome and entitle it, 'Why Standard & Poor's Slept.' As for the second, I'd opt for 'Why Standard & Poor's scared and provoked.'
BTW, S&P also has a very good shot at becoming synonymous with the term 'knee-jerk reaction'. Someone within that organization was hell bent on downgrading the country's rating. And he (or she) wasn't going to let a little thing like facts get in the way.
So, I ask you dear reader, what's worse: fiddling while Rome burned in 2008 or lighting the torch that set it ablaze in 2011?
And a tip o' the hat to Edward M. Ted "The Bastard" Birkhahn for this idea.