Why the Rating Downgrade from S&P Is Like a Bad Review from Simon Cowell on American Idol

When Simon Cowell was on American Idol he was the most entertaining and influential judge. He may continue to be that way on X Factor, his new show debuting soon. His assessment after a performance could bring a smile to a contestant's face or bring them to tears.

I see the downgrade of U.S. debt by the S&P a lot like the judging role played by Mr. Cowell when he was on the show. Here's why:

• Like Simon, the S&P is well known and influential within the financial community. People listen to its ratings and make choices based on its analysis much in the way that viewers of American Idol could be influenced by Simon's judgements and perceptions.
• Like Simon, the person ultimately responsible for downgrading U.S. debt is British.
• Like Simon, S&P is not the only judge of a country's rating. Simon originally had Paula and Randy and the credit rating business has Moody's and Fitch. Both Moody's and Fitch have reaffirmed the U.S.'s AAA credit rating for now. So, both have disagreed with S&P as Randy and Paula often did with Simon.
• Like Simon, the S&P is not infallible. Simon often panned singers who went far in the competition and lauded singers who flamed out early. The S&P helped create the subprime mortgage crisis by mis-rating hundreds of billions in mortgage loans.
• Like Simon, the S&P just provides guidance and does not actually have ultimate decision-making authority. In American Idol's case it is the voting public who ultimately chooses the winner, not Simon. And in the case of U.S. debt, it is the investment community who will decide whether or not to continue holding and purchasing Treasuries.

Tonight, we feel like a contestant on American Idol who has been savaged by Simon Cowell - pehaps humbled and slightly embarassed, but not eliminated or down for the count. S&P has no more power over us than Simon Cowell did over the singers on the show. Now, we just need to take the humble pie we have been served and use it to turn our economy around.