S&P Can Still Be David Stern

 | Dec 13, 2011 | 10:20 AM EST
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It's fairly quiet in Europe, with no big problems with Spain's bond auction and the usual chatter of the ECB buying bonds as Italian yields rise.

The live blogs are finding it tough to fill space. They are still trying to deconstruct the UK's move to veto something that didn't even contain the thing it said it was opposed to. That's akin to vetoing a plan that provides flood relief because you believe that down the road someone will come up with another plan to raise taxes for flood prevention (which you could later veto).

Blogs are also commenting on the prospect of the owner of the New Jersey Nets becoming president of Russia. The NBA is fine to let him keep the franchise if he wins. But will the Russian voters be willing to support someone who went out to buy an NBA team and ended up with the Nets? It's like Mitt Romney owning Sheffield Wednesday.

The relative calm may be just politicians and investors waiting for the ultimate judgment on the fiscal compact. That judgment comes from S&P and it is still hovering over the whole euro debt crisis. And that brings us back to vetoes and basketball.

S&P could be the David Stern in this whole deal. If it doesn't like the way things are shaping up it could effectively dismantle the deal, the way the commissioner did when Chris Paul looked set to go to the Lakers. The group of 26 would have to scramble for a Paul-to-Clippers Plan B.

We're getting to the point where it would make sense to give the ratings agencies a place at the negotiating table (maybe the one vacated by the U.K.). It would put the eurozone thinking of S&P, Fitch and Moody's out in the open. It would force the ratings agencies to propose action rather than just react to events. If they are truly independent in their analysis, it shouldn't be any different from the IMF being there.

But it would likely lead to Fitch cutting S&P to junk for not passing the salt at the negotiation dinner.

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