Friday, January 6, 2012

Another letter in The Washington Post: Handcuffed by a triple-A rating

Handcuffed by a triple-A rating

The headline on Mohamed El-Erian's Jan. 1 op-ed asked, "Who will save the triple-A rating?" This makes for a good opportunity to remind everyone that the United States, and the Western world, did not become what they are by sticking to the super-safe. They did it by allowing their risk-takers to take risks. A triple-A credit rating is a result, not a precondition.

If the United States is going to lose its triple-A rating because it is taking the kind of risks that are necessary to make the wheels of its development move forward, creating jobs for our grandchildren, that should be welcome. But if it is going to continue the current pattern, set out by loony bank regulators, of blindly avoiding perceived default risks and dangerously overcrowding the safe havens, then it is lost.

The expert financiers worrying about a triple-A rating are also navel-gazing. Much more important than a triple-A for the United States is the fact that this country is, by far, the foremost military power in the world. Lose that supremacy and all hell breaks loose. Keep it and a BBB rating could do.

Washington Post
Here other of my letters in the Washington Post on this issue:
September 6, 2007: Factors in the Financial Storm
June 20, 2008: An Aspect of the Bubble
December 27, 2009: Another 'worst': Faulty bank regulation
May 1, 2013: An American approach to banking
December 23, 2014: Let the market rule on risky trades
November 11, 2015: Reverse-mortgaging the future
August 9, 2016: Banks, regulators and risk
April 16, 2017: When banks play it too safe