In what is certain to be yet another domino in the deterioration of the global financial system, Standard & Poors yesterday downgraded America’s debt rating from AAA to AA+

You have to appreciate the dark irony in a company which was busy providing AAA bond ratings to sub-prime mortgage debt obligations with reckless abandon  in the 00’s, that now downgrades the US debt rating after a historic budget agreement that for the first time directly ties increases in the national debt to budget cuts.

So the people who were willing co-conspirators in events that triggered the financial crisis of 2008, now sit in judgement of the US as we try to pick up the pieces from the unprecedented damage that their previous carelessness caused our nation.

You would think that such monumental chutzpah should be enough to dismiss S&P’s judgement.

Indeed, dig a bit deeper and S&P’s decision appears more frivolous, as it was less rooted in hard analysis of our current finances than in an imperious reading of highly subjective US politics.

John Chambers, the head of sovereign ratings at S&P, told CNN that the political brinkmanship over the debt ceiling proved to be a key issue, with “the U.S. government getting to the last day before they had cash-management problems.”

So S&P downgraded our credit rating because they don’t like partisanship? That the process of how the US political system came to agreement is more important than the results of that agreement?

And since when is S&P the gold standard for political analysis anyway?  Indeed, who gave McGraw Hill a monopoly on political prognosticating and the final say on yet-to-be developed US political events and policy outcomes?

This is preposterous.

And  – double irony here – S&P wasn’t happy with a mere $2.4 trillion in reduced baseline spending. Like the Tea Party House members – whose political obstruction got us to within hours of the deadline that S&P deplores – S&P wanted $4 trillion in cuts.

This is laughable.

You can’t be a credible rating agency if you downgrade a debt rating based on domestic, confrontational politics whose purpose was to reach the same numerical target that S&P thought was appropriate.

Under S&P’s formula, your damned if you do, and your damned if you don’t.

S&P is further undercut because the other two rating agencies – Fitch and Moody’s – have been more circumspect and decided not to follow S&P off the plank.  That enhances their credibility at the expense of S&P.

But despite the poor quality of its prejudiced, malicious and inflexible judgement, the S&P decision will have an impact  on the US economy- how profound has yet to be seen.

We will have to wait for markets to open in Asia and then the US on Monday to see if there is an immediate impact. That immediacy would be rooted in the psychological shock that the largest economy in the world is no longer the safest investment, facts on the ground notwithstanding.

But beyond any action or inaction on Monday, it is hard not to see S&P’s decision as a driver for increased interest rates down the road as new, higher premiums for US treasuries ripple through the economy to loans for mortgages, construction, small businesses, cars, appliances and credit.

And of course, it could not come at a worse time, with the US economy nearly stalled.

So S&P gets another distinction.  Not only did their faulty analysis of sub-prime risk reek havoc on the US economy in 2008, their latest stab at evaluating risk is likely to be a drag on any efforts to keep the US from double dipping into recession

Who elected these guys anyway?

Among the many Americans outraged by S&P’s punitive action, President Obama figures most prominently.

America’s AAA rating wasn’t just a credit tool.  It was a source of national pride. Americans are trustworthy, they pay their debts on time.  The rest of the world could wallow in mismanagement and uncertainty, but America was the place where capital was invited, protected and nurtured.

Now?

Today, President Obama presides over a stalled economy, suffocating in debt and the palpable fear of the private sector to the uncertainty created by Obama policies and regulations.

S&P’s determination, no matter how flawed, is a indisputable failing grade for Obamanomics.  And in the lead up to 2012, President Obama now has the distinction of presiding over the first downgrade of American credit in the modern era.

It is a costly humiliation.

And it will echo all the way to November 2012.

The coming Republican campaign can be summed up in two words, “Had enough?”