Solution Los Angeles Style: Shoot The Messenger
The more I think of this, the more I love it—it is called solution LA Style— Los Angeles will no longer hire Standard & Poor’s credit rating firm after they downgraded the city investments from AAA to AA. Dropping S&P would save the city $16,000 a year.
I do not blame the city; they are after all following the lead of the US Senate, when they declared their intention of investigating S&P for downgrading US credit rating. The city's Interim Treasurer Steve Ongele said, “The market crash that came with the real estate debacle, it happened because folks like S&P rated AAA corporations that were not worth much of anything, corporations that are no longer there today. The fact that we have the courage to do this, the fact that we are the first city, I think that's a big bragging right.”
The Councilman Bernard C. Parks, who chairs the budget committee, said, not so fast. He thinks, it would be unwise for city officials to brag about canceling one contract with S&P, since it still has another one, and the city will continue to receive ratings from S&P on its “general obligation” bonds.
Not let’s see, just because, willingly, or unwillingly the rating agencies have bungled last time, are they supposed to not do their job this time? It is quite possible that S&P is now working with its own agenda, and have its own dog in this new game, nevertheless, the financial house of LA is under weather, without question.
The whole world knows that emperor has no clothes—the city of LA is in dire trouble. How long can the city really fool others, considering that there still are some neophytes who trust otherwise? Has any LA official read the end of that proverbial story, where the crow hid its head in sand seeing its predator?