It's all getting very interesting in the Eurozone, and even though I'm officially on holiday (in the EU if you're interested) I can't help but weigh in on the political up cry over rating agencies.
Schauble, Flassbeck and Borroso have all been floundering behind their throwns, looking for a scape goat rather than admitting defeat. And so they have all arrived at the ever more commonplace conclusion, to blame elements of the free-market. More specificly the evil "speculators" and rating agencies.
I've already discussed speculators/inveators at length and won't repeat myself, but what Borroso and his partners fail to realise is that rating agencies don't perform a function that investors don't already do themselves. Anyone who invests their capital, wisely at least, assesses the likleyhood of return. Rating agencies, like Moody's, simply collect readily available information and publish it into a report for others to read more easily. Essentially the credit worthyness of a country is already determined by economic factors regardless of whether rating agencies existed or not, they simply highlight the risks to the wider public.
Calling for a silencing of these bodies is nothing more than an attempt to cover up their own failure. Borraso and his cleptomanical chums would love to opperate with complete secrecy; printing, borrowing and stealing whatever they like to keep the Euro sharade ticking over a little longet. Fortuntaley for the rest of us the markets cannot be beaten, rating agencies just help us identify the bad eggs sooner rather than later.
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