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Old 01-13-2012, 05:55 PM   #14729
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Re: The Longest Thread Ever v28

Originally Posted by Nerox View Post
There are a lot of problems associated with the rating agencies. But the biggest thing is, they actually have no legitimacy to rate countries.
The thing I'm more concerned about is the fact Standard & Poor's used the guillotine in the end of a week where there was a lot of economical recovery for European countries. The agency could've waited a little more to actually have a legitimate reason for the cuts instead of looking like a troll.

About their legitimacy...

They are right, though, and that makes it difficult to stop them. They are an indicator for people who invest in those countries/companies, and rely on the rating from these experts (Though the state has enough competent economists to see that for themselves). There is talk of founding a european rating agency, but there you have the problem with the legitimacy again. What would be theirs? But there is also no law that forbids the analysis of the economies of countries.
Such law to limit the scope of rating agencies is vital in the economical turmoil we're living in. That's why I'm in favor of having an European rating agency IF the scope is limited to country/union companies (not even countries), like S&P (among others) rating US companies only and the European agency rating European companies only.

The way Angela Merkel reacted is the only way to stop the agencies to have too much influence on the markets. Just say that it is irrelevant and the countries economy is not influenced by decisions of Moody's or whomever. We still have a economic growth rating of over 1% and no recession, so that shows that a reduction of the German rating would not be correct.
Yeah, but not everyone is Germany, like you mention later. I speak for Portugal, we don't need any more money or further austerity measures, we just need stability to stay on the boat. Portugal can't simply say "oh, you agencies are nothing" because they're precisely stripping us of what we need.

But you also have to see that they are right in some cases. Nothing against your homecountry Num, but Portugal is simply not a good area to invest in at the moment. Such is Greece, Spain. I assume that they want to pressure the EU to get the €-rescue going again.
I'll correct and say that those countries are not good areas for average economists to invest in at the moment. Any economist with enough wits and courage will see those countries as golden opportunities to have them by the balls.

You build some factory there and they'll worship you like a god. Of course profit will be scarce in the near future, but at the long run it'll pay off because those countries will give special benefits for helping them in a time of need. That's what I assume the Chinese who are buying almost everything have in mind, most companies they're buying look like failsauce but give it time and you'll see China-Europe commercial relationships heavily benefiting the former.

About pressuring further the crisis... did the guys running those agencies suddenly forget their XX century history classes?
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Last edited by Numinous; 01-13-2012 at 05:56 PM.
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