The world's most powerful credit-rating nerd -- his finger poised on the doomsday button of the US economy -- says all this talk about a temporary solution to the country's deficit and debt ceiling isn't good for those looking to hold on to Uncle Sam's AAA debt rating.
David T. Beers, the Standard & Poor's executive who will ultimately decide if the US debt gets downgraded to AA -- forcing Americans to pay more for almost any type of loan while possibly leading the stock markets lower -- is the otherwise anonymous analyst thrust into the spotlight.
Reuters
David Beers
The 56-year-old will decide, possibly in the next week, if he will take the US credit rating down from AAA -- where it has rested since 1941.
"Ultimately, we've got to look at the overall plan to make a judgment as to whether it's likely to make a difference in the rising US debt," Beers told an interviewer yesterday.
While he refused to throw his support behind either the Democrats' or Republicans' plan, Beers said that passing a temporary solution that will force the country -- and his ratings agency -- to revisit the issue in several months "would be negative" in his downgrade review.
"We would have to come back and go through all this again and again," he told CNBC.
Beers wrote the book 15 years ago on sovereign defaults. One chapter in the manual, published by S&P, eerily predicted the perfect storm for an economic implosion. It's exactly the scenario facing Washington today -- political gridlock stops the bill-paying machine that a government otherwise can readily handle.
"A government can default on some or all of the obligations for political reasons, even when it possesses the financial capacity for timely debt service," he wrote, adding it causes "erosion of public trust in political institutions . . . and fertile ground for a sovereign default."
While Beers crunches numbers and Washington politicians continue their dysfunctional ways, markets get more and more jittery. The Dow Jones industrial average fell yesterday for the fourth straight day -- each day posting a larger decline.
The Dow closed down 1.6 percent yesterday to 12,302.55. The S&P 500 index was off 2.0 percent.
Meanwhile, S&P Chief Executive Deven Sharma, appearing before the House Financial Services Committee yesterday, denied accusations by Republican lawmakers that the ratings agency has been colluding with the Obama administration to gain leverage in the deficit talks. tharp@nypost.com
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