Credit Rating Agencies Dictate Policy to National Governments:

[Political Heretic]

I know people don't find this stuff as sexy or interesting as popular partisan back and forth bickering, but its REALLY important:

Portugal is downgraded by Fitch
Submitted by Robert Oak on Wed, 03/24/2010 - 13:32.

Portugal was just downgraded by http://news.bbc.co.uk/2/hi/business/8584812.stm">Fitch from a AA to a AA-.

Although the agency said Portugal's austerity budget was "credible", it said the government would need "to implement sizeable consolidation measures from next year", as well as reverse stimulus measures this year, in order to get its debt levels under control.

Can a credit rating agency has so much power they can force a nation to remove it's economic Stimulus prematurely?

The downgrade could mean Portugal has to pay higher yields on government bonds to attract investors, making it more expensive for the country to borrow money - even though other leading ratings agencies may not necessarily follow Fitch's lead.

So, it's not just consumers who get hammered with high interest rates at the very time they don't need them, it's nations now.

Fitch's Website:
http://www.fitchratings.com/index_fitchratings.cfm

The recent economic collapse should be a primer on the volatility and (in some cases) outright meaninglessness of credit ratings. In many instances, national credit ratings were uses as weapons to pressure financial institutions or even attempt to influence politics.

But why stop there?

Now credit rating agencies are dictating policy to struggling national economies based on their own self interest. This is a disturbing trend. Furthermore, given the scope of the Greece crisis and the setbacks with bailout assistance (Germany's rhetoric is pushing very close to putting a dagger through the heart of the EU) - now we see that transnational financial interests can blackmail smaller countries - even western industrialized countries - into terminating policy that would most benefit their economy and replace it with pro-capital flight policy that benefits foreign investors.

Hot.

[AzDar]

1. Very important stuff.

:kick:

[Double T]

2. The entire financial community needs to be heavily curbed.

[leftstreet]

3. K&R

[Political Heretic]

4. kick