[International Herald Tribune, France]
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Magyar Nemzet Konyvek, Hungary
Pro-U.S. Credit Rating Agencies Have Declared War on European Union
"Standard & Poor's and
Moody's, amid the global competition, are clearly trying to strengthen the
position of the United States. They are fully aware that their downgrading can
only harm Europe. … This is an economic and currency war between the U.S. and
Europe. The step taken by S&P's is already tantamount to carpet bombing."
By Anna Szabó
Translated by Carolyn Yohn
December 7, 2011
Hungary - Magyar Nemzet - Original Article (Hungarian)
"There are two
superpowers in the world. One is the United States, and the other is Moody's Bond Rating Service. U.S.
bombs can destroy a country - but so can a negative bond rating. And believe me
- it's not always clear which is more powerful." Thus wrote Pulitzer-prize
winning journalist and economist Thomas Friedman for The New York Times
in 1996.
At that point, we still
hadn't seen the Asian, Russian or South American crisis, the burst of the
dot-com bubble or the housing bubble, toxic assets or the financial collapse.
All these events occurred
without one of the supposedly ever-vigilant credit rating agencies taking note
of the growing risk. These are the same companies whose sole raison d'ętre
is to warn investors of potential danger. In the time since this Times
article was published, at least two dozen countries have been wrongly rated.
Their credit rating then had to be raised or lowered by up to five basis points
so that at least in retrospect, it corresponded to reality.
Yesterday [Dec. 6], one of the
three major credit rating agencies, namely Standard and Poor's, issued
a credit warning on the eurozone. The company issued a statement
informing that one false move by any E.U. country will result in it being knocked
down, thrust onto the junk pile, and half a continent will be banished from the
investment world.
It was all very well timed.
On the very day that S&P's came clean about a major system failure in its
rating system, Angela Merkel and Nicolas Sarkozy conferred on the future of the
eurozone (including about possibility of E.U. control over the budgets of individual
member nations), and a European summit was scheduled to explore G20 assistance
with the euro crisis.
Posted by WORLDMEETS.US
Let us take a deep breath and
try to remember that not long ago, something very similar happened in Hungary.
First, we were punished (in politically-correct terms, a “negative outlook” for
Hungary debt was registered) by the same S&P's. And Hungary was already under
a microscope from across the Atlantic - which doesn't help given the recent
rating agency events. In order to really drive the message home, Moody's helped
out a little as well by slashing Hungary's credit rating (the two make up 85
percent of the global credit rating market!). By chance, the timing was perfect:
Hungary's credit worthiness was lowered just as the IMF auditor - following up
on the 2008 IMF emergency loan to Hungary - was arriving in Budapest.
From that, the extreme right coalition
[Hungarian Socialist Party (MSZP), Politics Can Be Different (LMP), Movement
for a Better Hungary (JOBBIK)] introduced the idea that Hungary has become a
modern-day Sodom and
Gomorra. According to them, the economics minister and to a lesser extent
the national economy itself are on the wrong path - since the credit rating agencies
say so.
By this logic, we should also
say Auf Wiedersehen [goodbye] to Angela Merkel, adieu to Sarkozy,
and expel everyone else who has yet to be forced out by these “investors.” The
entire eurozone should be ashamed.
The stakes are already high. New
York rating agencies Standard & Poor's and Moody's, amid the global
competition, are clearly trying to strengthen the position of the United States.
They are fully aware that their downgrading can only harm Europe. And in fact,
that is their objective. This is an economic and currency war between the U.S.
and Europe. The step taken by S&P's is already tantamount to carpet
bombing. As one of the most indebted members of the European Union, their war
is affecting us here at the far end of east-central Europe.
As we see it, the entire
United States and the whole of the eurozone is struggling with a serious debt crisis
- and at stake is which superpower can withstand the latest wave of recession
with the least amount of damage. The E.U. must throw down the gauntlet and ban
country ratings, and create a European rating agency in their place.
John Authers and Vincent Boland debate the impact of the credit rating
agencies on the eurozone crisis [from 2010]..
[CLICK HERE OR CLICK PHOTO TO WATCH]
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