The ratings agencies

are behaving like

financial terrorists

 

Raymond Soltysek

 

Just before Christmas, the credit ratings agency Fitch rubbished the latest attempts to solve the debt crisis by lowering the ratings of seven European countries, and warned France that its credit outlook was now deemed to be 'negative' rather than 'stable'; their competitor Standard and Poors (slogan: 'our standard is to make you poor'?) finished the job of sticking the knife in by ending France's AAA status.
     In early December, S&P pulled the rug out from underneath the Merkel/ Sarkozy announcement of a treaty change to ensure closer fiscal union by announcing within hours that the whole of the Eurozone was in imminent danger of having its rating downgraded. In September, the Italian economy was basically flushed down the toilet by the ratings agencies, costing that economy vast sums as interest rates were hiked for its borrowing. 
     More and more regularly, these 'experts', afforded some kind of guru status in the world of finance, have been sticking their oar in and causing financial mayhem; the US recently had its AAA status threatened, and the UK found itself described as performing at A+ level rather than AA-. Regardless of what these ratings actually mean – my goodness, how my mother would have loved me to bring home A+ on my maths tests – the moral and financial panic that follows such announcements wipes billions off economies.
     Many of us have personal experience of credit ratings agencies. Many years ago I experienced some very temporary financial discomfort and was late with a few loan payments. Subsequently – and despite ultimately paying off that loan early – my credit rating was 'downgraded', and I found credit difficult to come by and mortgages quoted at higher lending rates for the next six years.
And yet these rating agencies failed to spot the biggest banking crisis in living memory just three years ago. 
     The US department of homeland security was created in response to the terrorist attacks of 9/11. In 2010, it reported on the 2008 financial débâcle, and found that 'credit rating agencies that investors relied on to provide impartial and accurate analysis of thousands of mortgage-linked securities instead used outdated models and inadequate data, were too influenced by investment bankers, allowed chronic resource shortages to undermine ratings, and delayed downgrading investments once problems in the mortgage market became clear'. 
     So a US government cabinet office charged with preventing further terrorist attacks on the country concluded that ratings agencies failed to protect the nation – thereby causing untold misery for the populace – because of their unhealthy relationship with the very people on whom they were supposed to be reporting. The logical assumption therefore is that these agencies are just another eddy in the self-referential cesspool that is international finance, having no interest in accurate assessment and merely helping to create the conditions under which rapacious markets can fleece economies and bleed countries dry, leaving the ordinary populace to foot the bill with draconian austerity packages. 
     One has to ask why credit ratings agencies are so diligent about identifying and reporting the credit status of ordinary working people and are so vociferous about the financial capabilities of elected governments to manage their economies, but yet were so silent about the great crash of 2008. Either they were incompetent, or, as the department of homeland security suggests, complicit in it all.

 

     Back in September, on the same programme announcing the Italian downgrading, Nick Clegg was interviewed to defend his government's obsession with the dismantling of the social fabric of the UK in the cause of austerity. In referring to the troubles of  Greece and Italy, he spoke twice of those economies being 'pushed to the edge' by the markets, and warned that the UK economy would be 'harried from pillar to post' by the financial sector if it changed course. 
     'Pushed to the edge?' 'Harried from pillar to post'? This makes the actions of the financial markets sound eerily similar to those of a terrorist organisation intent on attacking the democratic will of the people and subverting our way of life. It seems that the financial sector has declared war on elected governments across the world, and the ratings agencies are in the front line. For that reason, perhaps it's wholly appropriate that agencies be investigated by homeland security: terrorism can be financial as well as physical. 
     Of course, given that the mantra for so long has been that we don't negotiate with terrorists, what is the justification for putting up with that kind of sustained campaign against our democratic values? Just what on earth are we doing designing government policy which specifically panders to the subversive, treasonable behaviour of the financial sector? 
     John Cameron, in his recent critique of the public sector pensions strikes in Scottish Review, brought back happy memories of the 1970s with his outdated rhetoric of unions holding society 'to ransom'. What we need to acknowledge, sooner rather than later, is that those workers are society: teachers, nurses, street sweepers in the public sector and shop assistants, welders, bricklayers and, even, lawyers in the private sector are the people who operate the machinery of society. The real hostage-takers are those in the financial services sector who bet both ways and who care about nothing in the pursuit of cash – those like trader Allessio Rastani who was at least honest about his greed when he admitted on BBC news that recession was a money-making opportunity for him and that Goldman Sachs rules the world.
     And in their dream of establishing a low tax, low regulation, small government world ruled by them, the financial sector has politicians in their pockets and the media at their beck and call. For months now, the breaking headline news on Radio 4's 6am bulletin has frequently been ratings agencies' pronouncements: we can only speculate why the BBC continues to give such exposure to them, knowing that such publicity will have a catastrophic economic impact. Moreover, why is the judgement of the credit ratings agencies – all self-appointed experts – broadcast with no attempt at balance, no dissenting voices and no reporting of the incompetence and venality of the agencies, such as that discovered by the anti-terrorism department of the US government?
     These agencies should be called out for what they are: flim flam merchants who enable their fat cat buddies to rape worldwide economies. Every statement of theirs should be vociferously countered by regulatory investigation into who profits from their decisions, and, should it be discovered that influential clients have made a killing in the downgrading of a whole continent's reputation, then we should fine the life out of them all and, if that doesn't shut them up, we should throw them in jail.
     And then they should thank their lucky stars that we don't treat them like those other terrorists who have us living in fear for the future. I believe Guantanamo has a few spare beds.

 

Raymond Soltysek was born in Barrhead and is a graduate of Glasgow University. He is a teacher and lecturer