Why is India like Warren Buffett?

Who woulda thunk it, eh!

In the context of the S&P downgrade of the US' creditworthiness:

the Indian exposure is equivalent to an estimated USD 40 billion worth treasury bonds held by one single entity, Warren Buffett-led Berkshire Hathaway.

The US dollar being an international currency and a safe haven means that India, too, holds T-bills:

As one of the 15-largest foreign creditors to the U.S., India’s exposure to the United States’ ballooning debts is estimated at USD 41 billion — higher than the money America owes to countries like France and Australia.

One crazy, modern world we live in!

I suppose this is the equivalent of people saving their hard-earned money in a bank, only to realize later that there was something seriously wrong with the bank.  But, by the time they figure it out, there is no way to withdraw the money too.

Meanwhile, emergency meetings have been scheduled to prevent any nasty contagion from the combined US/Euro issues.

On the other side of the issue, turns out that S&P itself has erred in its computations?

The reality seems to be that S&P made a very embarrassing error in the numbers that it initially sent to the Treasury – one that could have made a substantive difference to its downgrade decision.
The administration’s counterattack, however, is a convenient distraction from the harsh criticism of the political process that was at the heart of S&P’s decision.
The initial numbers that S&P sent to the Treasury at 1.45pm on Friday were based on the “Alternative Fiscal Scenario” prepared by the Congressional Budget Office. That assumes that discretionary federal spending will grow in line with the economy. S&P then subtracted the roughly $900bn in savings created by the debt ceiling deal to estimate net debt.
However, the CBO had calculated the $900bn savings from a different baseline, which assumed that spending would grow in line with inflation. Calculated from the higher alternative scenario, the budget savings would be closer to $3,000bn. Adjusting for this would mean that net public debt only rose to 79 per cent of gross domestic product in 2015 instead of the 81 per cent in S&P’s initial estimate.

Sure enough, Paul Krugman has written about this:

The point here is not so much the $2 trillion, which makes very little difference to real US fiscal prospects; it’s the fact that S&P stands revealed as not understanding basic analysis of budget estimates.

Rajiv Sethi says we simply ought to say F*&% You to the credit agencies (ht):

Perhaps the time has come to consider a complete overhaul of this dysfunctional system. Withdraw the special designation accorded to the major agencies, so that they compete on a level playing field with new entrants. If they really do have the expertise to make assessments of credit risk that are more accurate than the market, let them build reputation and find clients willing to pay for their pronouncements. Make capital requirements for financial institutions independent of ratings, thus stripping the agencies of their monopoly power and guaranteed sources of income. And in the meantime, greet their pronouncements on sovereign debt not with an anxious wringing of hands, but with a collective yawn.

Funny, though, that the F-you arguments were far from this loud here in the US when the credit agencies went around downgrading sovereign governments elsewhere, and even though those governments were complaining about S&P and the like :)

All these remind me of the old quote attributed to Casey Stengel: "Can't anybody here play this game?"


Seriously, were things always like this?  What a fine mess!