Rating agencies attacked by their victims
Posted by adminWhile Greece and Portugal have seen worse with a vengeance by the rating agencies in recent months, leaders protest against these messengers of bad news. Latest episode of this unequal struggle, the Greek finance ministry said on Monday that he rejected the further lowering of its rating by Standard & Poor's. A decision "has no validity," he judged.
"This degradation occurs in a period where no new information or decision aggravating the situation in Greece has occurred since the previous assessment, a month ago, has developed the ministry said in a statement. However, "the rating agency decisions must be based on evidence, decisions and real data evaluation of each economy.Otherwise, their validity is questioned. "
"Unfair Practices"
In Portugal, another country recently described by deterioration in score, four economists complained against rating agencies for "unfair practices" have caused "serious damage to state interests and the Portuguese people." An investigation was opened on 3 May, the newspaper Diario Economico. Last month, Jean-Claude Trichet himself, the president of the European Central Bank, which acknowledged that "high concentration" agency "was problematic." They are just three: Standard & Poor's, Moody's and Fitch.
Credit rating agencies have since the beginning of the crisis of sovereign debt, accused of feeding a downward spiral for the countries attacked by the markets.While the financial situation of Greece, Ireland and Portugal are deteriorating, their interest rates rise, adding to the same time the burden of debt. To reflect the worsening situation, the agencies in turn degrade the country and note those decisions lead to new increases in interest rates.
"Easy Target"
"Agencies are an easy target for politicians, it allows them to deceive," relativized a bank economist. "Above all they were not brilliant since the beginning of the crisis: they missed the subprime disaster and have not witnessed the arrival of sovereign debt problems in the eurozone." Until early 2010 All countries in the area benefited indeed flattering notes.Even Greece, while its debt was already over 120% of its gross domestic product.
A country in a precarious balance, however, seems to escape (temporarily?) With the severity of agencies: Belgium. For 11 months without a government, the country had been pressed flat to resolve its political crisis. But Saturday night, Prime Minister Yves Leterme Acting launched its Twitter account "Standard & Poor's less pressing." Under close supervision, Belgium should not be degraded immediately. An austerity plan adopted in April aims to balance public accounts in Belgium in 2015.
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