Fiction, Fantasy and the Euro

[marmar]

from truthdig:



Fiction, Fantasy and the Euro

Posted on Dec 6, 2011
By William Pfaff


The American rating firm Standard & Poor’s warned 15 European nations on Monday, including Germany and France, that unless they solve their currency problems this week, to the satisfaction of S&P, a business corporation, this company will “downgrade” them, with the effect of increasing the interest they must pay on their sovereign debt and on foreign funds placed on loan to their economies.

S&P, like the other rating firms at work today, is a company operating to make profits for its managers and stockholders. It has no public mandate, and indeed, if it acted under an assumed public-interest mandate, it could find itself sued by its stockholders, whose interest is to profit themselves, not the public.

These “ratings” of companies and nations lack any objective authority or validated qualification. The company sells opinion (like journalists; but nations and central banks very sensibly do not base their decisions on what journalists write). The potential link of unqualified or biased ratings to market speculation is obvious, but nonetheless accepted on the international markets, despite proven instances of past rating agency malfeasance, including the AAA-rated securitized junk mortgages responsible for creating this world financial crisis.

The extent to which the economic policy of nations is made on the basis of misinformation or wishful thinking is not generally recognized. Even when error becomes established as part of the conventional wisdom, it rarely is challenged because of the price usually inflicted upon public dissenters. ............(more)

The complete piece is at: http://www.truthdig.com/report/item/fiction_fantasy_and_the_euro_20111206/?ln

[dballance]

1. Why Does Anyone Listen to Them Anymore?

They, in my opinion, are clearly bought and sold by the industries they propose to rate. They rated all those sub-prime mortgages as AAA when they were clearly faulty. It is a "good old boys" network of charlatans that is running our world now.