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The 3 hated American horsemen of the Apocalypse – Standard & Poor’s, Moody’s and Fitch Ratings – continue to cause mischief in Europe – commentary by Emil Hoogensteyn

July 28th, 2011
The opinions expressed are not necessarily those of OTA-Berlin but of the contributor – in this case Mr Emil Hoogensteyn. Blog articles and subsequent comments that appear on the site are not the opinion of OTA-Berlin but only of the comment writer. While we welcoming any linking to the blog the contents may only be reproduced or copied  with the prior written permission of OTA-Berlin GmbH. www.ota-berlin.de
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If one were to believe the American doom-sayers the hated American rating agencies– the three horsemen of the Apocalypse, the so-called ‘Big Three’ US credit rating agencies Standard & Poor’s, Moody’s Investor Service and Fitch Ratings – then Ireland has again joined the ranks of the European basket cases whose sovereign debt is going to be rated as junk.

It is clear that when the economy of one member of the Euro-zone sinks, it can drag the Euro down across the entire continent.

However not only the Americans can play this game and it is becoming increasingly evident that the’ Yurpians’ [George W Bush] are planning a strategy to combat or at least neutralize the negative effects of these rating agencies on their own turf.

The Chinese are already downgrading US debt! http://www.zerohedge.com/article/rating-agency-wars-2-evil-empire-strikes-back-dagong-says-likely-downgrade-us-even-if-debt-l

The US national debt does not a pretty picture make -to follow the gruesome extent of the US national debt – http://brillig.com/debt_clock/ and for a 2010 comparison to other countries -http://www.economicshelp.org/blog/economics/list-of-national-debt-by-country/.

If a European ratings agency did exist with the same clout as the 3 American ones presently have, then they could equally rate individual American states like California [ presently in debt to about 20 billion Euro] and down grade them. It could then also downgrade US national debt with a concomitant ‘flight of safety’ to the Euro or maybe even more to the Canadian dollar and/or the Swiss Franc.

The fact that these three rating institutions are located in the UK and US and not in continental Europe should be seen by everyone as a huge red flag.

In the past when investors have departed from US treasuries Anglo/American owned ratings houses pick another Euro state to downgrade – this then conveniently sends these investors and their monies back into US treasuries – or so it has been in the past.

However even now in the US people are asking who are these so-called financial luminaries from upon high to tell the US and others exactly how much debt they should shed and by when.

When Wall Street collapsed in winter 2007, these same rating agencies were handing out their highest AAA ratings to some of the most dubious and riskiest mortgage-backed securities – and thus earning enormous fees in the bargain.

Now Standard and Poors has the temerity to even suggest a downgrade of US debt.

Where were these same so-called financial worthies when President George W. Stupid turned a $5 trillion budget surplus handed to him on a plate by outgoing president Bill Clinton into a gaping deficit?

The two main drivers of the US deficit under Bush were the tax cuts for the rich and two needless wars in Iraq and Afghanistan, which have added and continue to add $1.8tn and $1.4tn to the US national debt respectively.

By comparison the proposed Obama-era stimulus spending, which would add circa $700billion to the federal budget deficit, and even his healthcare reforms are really not in the same league.

In terms of the deficits, the George W. Stupid policies were much more damaging than anything Obama has proposed. [ http://www.bushtothehague.org/ ]

 

Had these rating agencies done their job properly, there would not have been the debt and housing bubbles in the US to begin with and the resulting taxpayers bailouts of both Wall Street and European banks.

 

German Chancelor Merkel is calling for an independent European rating agency as are EU president Barosso and German Finance Minister Wolfgang Schäuble who all think that the Anglo/US-based rating agencies are biased against Europe.

Wolfgang Schaeuble

Wolfgang Schäuble - foto from Wikipedia Bundestagsbüro Wolfgang Schäuble

To read more about this there is an excellant article in the UK INDEPENDENT -
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One Response to “The 3 hated American horsemen of the Apocalypse – Standard & Poor’s, Moody’s and Fitch Ratings – continue to cause mischief in Europe – commentary by Emil Hoogensteyn”

  1. Nancy Astor says:

    This problem of the rating agencies will not go away!!!!!!!

    European debt crisis: Spain downgrade threat unsettles markets

    Dragged down by banking stocks, Spain’s Ibex index lost over 130 points to 9526.5, a fall of 1.36%, while Italy’s FTSE MIB dipped 1.5%. Germany’s Dax and France’s CAC both fell 1.1%

    Read complete article in todays Guardain –
    http://www.guardian.co.uk/business/2011/jul/29/spain-ratings-downgrade-threat-moodys

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