ALLIANCE FO§ DEMOCRACY

Three in the same boat: Rating agencies, banks, governments

With the complaint of the US Government against the rating agency Moody’s, a raw of light seemed to have fallen on a conflict of interest, which is more sensitive than the Gordian knot, and probably can only be solved by force. Governments can have no interest at all in influencing ratings, because their profits from business are their guarantee of the leadership; banks therefore have official permission to assess investments of all types according to ratings and to trade them accordingly. Here the motto applies: the greater the risk, the less capital the banks have to have available. The banks must therefore improve their so-called capital quotas (and also the number of women at higher management levels: Women’s quota! ), which means: a transaction must not smell of risk. For governments, this was a convenient back door, because actually they had for electoral reasons already trumpeted that they wanted penalties for bankers , and to ensure that all capital quotas were increased, and that loans, investments and transactions were reviewed more closely.
For a moment, the uproar will mean that a few less loans are made, that the rating agencies no longer appear daily in the press, that other events will captivate our media; nevertheless, the success of senseless complaints against rating agencies and also a little election bluster remains difficult. Because due to the entanglement of banks, business and governments, they can all only have the intention that business should continue as it has done previously. If the complainants are judged right, this will mean that the agencies have awarded excessively good ratings, which would increase the borrowing costs for all those countries who have been assessed by the agency. The USA must have prevented this, because as a bankrupt it would then have to pay unimaginable amounts in compensation.
It therefore seems to be some sort of stupidity, or a shot in the foot, that the complainants do not seem to have considered the far-reaching effect of their claim, or there are already covert ways currently being negotiated in order to prevent the verdict. For investors, the watchword is: Do not buy any more!
From this, it can be seen once again that politics has no real means of intervening in the business of bankers, even though the European Parliament has recently take serious steps to tighten up the regulations for ratings. But they too have wonderful plans, such as “when and how rating agencies may assess national debts and the financial situation of private companies. According to these plans, rating agencies can only issue unrequested national debt assessments at certain times, and private investors will have the opportunity to take action against the agencies on the grounds of gross negligence. The size of their shareholding in rated companies will also be restricted, in order to avoid conflicts of interest.”
This all reads very well, when there is also talk of penalties for rating agencies, and when it will have to be disclosed how the agency has come to one or the other assessment. It would be highly desirable if the European supreme powers could bring some order into this chaos, but the Alliance for Democracy fears: As the agencies currently dream on the small scale, and already very carefully protect their interests, on which economics and politics depend, this may also soon be possible on a European scale, and in this way a syndicate will be established which finally outmatches that of the USA – but this is the nature of competition!