Salmon makes a more interesting (though contradictory to his first point) argument when he writes:
[A]all sovereign defaults are political, not economic — especially defaults by countries which borrow exclusively in their own currency. S&P and Moody’s can look at all the econometric ratios they like, but ultimately sovereign ratings are always going to be a judgment as to the amount of political capital that a government is willing and able to spend in the service of its bonded obligations. If Treasury really believes that S&P based its judgment fundamentally on debt ratios and the like, it’s making a basic category error about what it is that sovereign raters actually do.
If this is the case, I think someone, S&P especially, should point out that in fact, S&P is NOT doing a credit rating, but some type of "political willingness" rating. Of course no one will care what some guy name John Chambers at S&P has to say about politics. If they were truthful about what Salmon says they are doing, no one would even report on what S&P thinks about this.
This is a big lie by S&P is Salmon's defense of S&P.
And even that defense is ridiculous. I can't speak for other countries, but in the United States, there is a constitutional obligation not to default on debts. There will never be even a technical default by the United States government. Because the 14th Amendment prohibits them.
Or does the United States Constitution not count in determining "political willingness?"
Anyway you cut it, these defenses of S&P are embarrassment for those providing them. Shame on Klein and Salmon.
Speaking for me only
