Thursday, April 29, 2010
Wreck the global economy - set up a ratings agency
Posted by David Smith at 10:15 AM
Category: Thoughts and responses

What has caused the intensification of the panic in the eurozone? Standard & Poors, in its wisdom, decided to downgrade Greek sovereign debt to junk status and then downgrade both Portugal and Spain. Done at a time of delicate negotiations between the Greek government and the International Montary Fund and eurozone, it is hard to think of a more effective way of throwing a very large spanner in the works.

S & P might argue that its actions have helped put the pressure on the politicians to come up with an early Greek solution. I see them as more like shouting fire in a crowded theatre. The other big agencies, Moody's and Fitch, have so far shown far better judgment.

Ratings agencies helped get the global economy in to this mess, by giving AAA status to dodgy securities and derivatives. At least one of them seems determined to stop us getting out of it.