The Empire of Rating Agencies

Who in a mere 20 (or maybe less) years ago one could imagine that would be foreign entities, some with less than a century of existence, which have no military or economic power, but only by their mere speculation and opinions can harm both states (the supposedly sovereign entities that should also be more credible in the world) and how to shake the larger and more robust economic bloc in the world, and in the bottom, shaking the entire economic ideology dominant in the modern world-system.

Those who follow the news regularly (and notice that even Germany not escaped the cuts), and read the previous messages I posted here bout this subject of the descent of rating, certainly remember the comment I made to the lowering of the debt made ​​by Standard &Poor's to nine countries in the Euro Area

Even then alerted to the abuse of these attitudes on the part of rating agencies, but now I dedicate this post just to talk about that: the panic that they still lay on the States and the international economy, and on the structure of the European Union.

The fall in the rating of various countries made ​​by Standard & Poor's, provoked astonishment and panic not only within the European Union, but also all over the world. In fact, this attack as well as too bold (too bold for some), who left the air the possibility of more penalties in the future that further aggravate the already precarious situation of many countries affected by the cuts, and provoked an artificial division within the European Union.

These actions of rating agencies have revived the old friction between the countries of northern Europe, a self-proclaimed keepers of a healthy and robust economy and that support the countries of Southern Europe, who continue to live immersed in their economic problems, caused by bad governorships.

However, the most revolting in the midst of all this is that the Standard & Poor's and other rating agencies continue to meddle where they do not have and will continue to support their decisions on reasons that seem increasingly elaborate. Despite the austerity measures that the countries most affected by the crisis continue to implement and the results are beginning to get (not counting of course with the special case of Greece), which could be best if they all not continued in a continuous economic recession cycle , the increase in bailout funds in Europe and signs of understanding that are issued by Germany and the European institutions on the efforts of countries in difficulty, the rating agencies continue to treat the Western countries like the underdeveloped countries.

And it seems that the markets continue to give too much importance to the opinions of rating agencies. And worse than that, it seems that these opinions (because in fact they are nothing more than just opinions) these opinions that have no decisive character or sovereign on the subject, are influencing the policy and the proper functioning of the European Union. Yes, because the rating agencies (these three are American), continue to assess Europe as if they had to assess the U.S. and as if the whole world economy would behave as the U.S. economy: why is that, while Europe not behave as the U.S. behave in this situation, the rating agencies continue to plague the rankings of European countries.

However, one aspect that is pleasing to the rating agencies is the behavior of the European Central Bank (ECB), which is following a strategy similar to the American model to prevent the collapse of troubled countries, the ECB is buying debt to countries in greatest difficulty in large quantity, allowing them to also ask high loans with an interest rates incredibly low. Maintaining the interest rate to 1% allows companies to finance themselves at lower costs, relaunch its production and thus create more jobs.

Only it seems to please the rating agencies. But it is not enough: for them the European model should approximate ever more American model. For this, Europe should seek to issue money wildly, provided that the conditions demand it, to assist the banking system, and apply budgetary expansion policies, instead of supporting so much the agents' savings.
Unfortunately, it seems they did not realize that Europe is different from the U.S. and now the U.S. is not a model or example to anyone. The country is also completely strangled by a debt of gigantic proportions, and they do not have a social system like that of the Eurozone countries ... which still makes your debt more strange ...

At this time the rating agencies have played a role for which they were not created, are receiving too much importance on who is responsible for granting only opinions based on criteria chosen by themselves, and are meddling where they do not have, forgetting completely from its true role ...

The proof of this is what I have already mentioned: the North American rating agencies, just based on their rankings could divide the European Union.

Germany stands as the only good student (and everything that happens bad is the responsibility of other members that she has to bring a drag). The northern countries are more "sensible" and that seem to resist all this, as they have always applied the appropriate policies and have a total control and balance in their accounts public. In the south, are the irresponsible countries seen in the eyes of neighbors to the north as lazyand unable to do anything right. And Greece is a special case of this group, it is seen as one of the factors that led to the sinking of the other countries of the South.

In the midst of all this, France as much as we want to paste to Germany, stays in a position intermediate between the situation of Germany and the countries of southern Europe and is unfortunately closer to the latter.

There currently are appearing within the Euro Area, two "Euro": one for the north and the other to the South.

As for European governments, they have two ways to react to the current situation: either continue to give excessive importance to the rating agencies and continue to rely only on the cold numbers for all its policies, or decide once and stop being stuck in the past and reform a system of assessment completely outdated. Yes, because this control by these three rating agencies is completely outdated. Do not just expressing an opinion and submit a two or three (and sometimes not so many) justifications for the air. Should be required to account for their decisions and ground them properly. Not to mention the need to revise the rating scale.
If nothing is done, this "little game" is to stay and will continue to drag the countries one by one without forgetting anyone. Maybe when all countries enter into bankruptcy if no longer believe in these agencies and finally begin to consider alternatives.