Rating Agencies and Usurers
Now about rating agencies. President of the German Federal Office on financial supervision (BaFin) J. Sanyo in due time called those agencies by the “largest uncontrolled authorities of the world financial system”. The question is about such world famous rating agencies as Moody`s, Standard & Poor`s, Fitch which during many years (even decades) were specifying the “weather” in the financial and other markets, as well as ratings of companies, commercial projects and the whole countries. At the same time, it is necessary to underline two major features of the rating agency activity:
a) “know-how” under which the ratings were made was closed;
b) agencies were private structures beyond the sphere of control of the state supervision bodies.
While appraising the rating, the supervised finances the supervisor (rating agency) that creates a nice “nutritional medium” for corruption and misrepresentation of the real situation in the markets. The agencies have been in “informal” relations with some influential and rich clients, and by their order gave them overrated marks (gave ratings). If necessary, by order of the competitors, the agency could “put down” some companies or even countries.
Already mentioned by us J. Sanuo iamid the current crisis has called the rating agencies by “money making machine”.
Speaking about a “contribution” of rating agencies in creation of the current economic crisis, Jacqes Attali, a known writer and a banker, writes in one of his last books: “The most interesting is that money compensation for the granted information (ratings - V.K.) they (rating agencies - V.K.) receive from the entities subjected control … In total, as the agencies are interested in the maximal profit and wish to receive their share of fantastic riches, they with criminal condescension give “marks” sometimes even y not having looked at the corporation and its “the product”. Where the objectivity can come? The facts are those: the total income of three major rating agencies for period 2002 to 2007 was doubled (from 3 to 6 billion dollars). And the incomes of Moody's for 2000 - 2007 increased twice!”
Even the official authorities of the “gold billion” countries have recognized that the “contribution” of rating agencies in the current crisis is quite rather significant. Some private experts even have called the agencies by “distributors of fire” . Even in summer 2008, some Wall Street banks had high ratings, and in the fall of the same year they appeared bankrupts. At the same time, the ratings of some Russian “blue chips” (the key players of the share market of Russia) were sharply decreased that caused the decrease in quotations of the domestic market (much more as compared with the share markets of Western Europe and the USA) and mass “withdrawal” of foreign investors from the country.
At the peak of the first wave of the crisis (autumn 2008 - spring 2009) different requirements began sounding regarding to rating agencies: to liquidate, to nationalize, to put under rigid control of the state supervising organs, to make rating procedure “transparent” etc. However, after the situation in the world economy got stable (temporary, according to our opinion), the criticism of the rating agencies became calm and everything resumes its normal course: the agencies still remain the “largest non-controlled power structures of the world financial system”. The still serve the interests of those who pays more.
Let's tell that agency Fitch decreased the sovereign debt rating of Greece with its budget deficit equal 12.7 % of GDP from A- to ВВВ +. And if to look soberly at another country – the USA, it is necessary to recognize that it is not so far from Greece on many indices. For example, the U.S. federal budget deficit in 2009 much more exceeded the limit 1 trillion dollars, and the state duty exceeded 100% of GDP. And so that? The three rating agencies still give the USA the higher appraisal - ААА. In fact, rating agencies act as regulators specifying the directions of international capital flows.
Statistical services. To maintain the financial market “behavior” necessary for speculators, they quite often are “accompanied” by the state statistical services. All of us have heard a joke: “There are three kinds of lie: the lie, shameless lie and statistics”. So, the state statistical services from year to year improve the third kind of lie.
For example, to support the boom in the share markets in the second half of the past decade, the U.S. Ministry of trade in charge for the economic statistics invented a new aspect of “postscripts”. So-called “assigned rent” is a certain “virtual” rent which the owners of houses and apartments would pay in case if they had to rend these houses and apartments. On some estimations, the “assigned rent” make up to 10 % of the GDP. Other countries have not thought up such statistical fraud yet, therefore the U.S. GDP is overstated as compared with other countries. Actually, Uncle Sam has a lot of such statistical shifts, therefore it is not correct to compare official figures of the U.S. GDP with the GDP of other countries.