Why do S&P and Moody's rate sovereign debt? Do we need these people to tell us about the US or any other major country's financial picture and assign a rating? The short answer is no. They are in the news recently announcing rating changes in a desperate attempt to prove they still matter. After their complicity and culpability in the 2008 financial meltdown it is a wonder they are still in business and not in jail. Congress is continuing to investigate their role and far be it for me to expect Congress to do anything constructive, they might just get this right by accident.
It is bonus season on Wall Street and the news is not happy for the employees. The good news is for the shareholders. Certain firms are beginning to fundamentally restructure their approach to compensation and are putting in mechanisms that allow the firm pay out some comp over a period time. This will align the traders and the stockholders interests. By putting a larger component of stock in the overall compensation and deferring the cash payout for a time the employee will have very real interest in building the franchise and working for the long term. People on Wall Street work hard and expect to be paid well. Most of us went into the business because we felt there was a greater chance to be overpaid than in other industries. This is still true but it will be over a longer time than previously.
States continue to lead the fight for fiscal responsibility. Look at NJ, NY, Wisconsin, California etc and you will see the Governors fight the same battle;to rein in public spending, get control of the education budget and reform the tax code to make the state more attractive to businesses. This cuts across party lines and I believe enjoys wide spread support among the voters. The lesson to be learned from Scott Walker and Wisconsin is to make headway on the problem but don't overreach and spike the ball for ideological victories. Do what needs to be done; the public will accept the austerity measures but understand everything will affect people in a real way and there is a human cost to all policies.