With all the focus on Greece, I had missed the latest news about the rating agencies cutting Portugal's rating - here's a powerful response from a Portugese journalist
The rationale for Portugal’s rating cut makes no sense. Portugal was targeted with a streak of rating cuts that put us in the verge of “junk”. But then everything changed, a stable majority in parliament, a 78 billion euro loan, a programme designed by the troika, a committed government, a prime-minister obsessed with compliance. No matter what. We weren’t even given a full week: we’re junk.The rating agencies, are of course, utterly incompetent and corrupt - since they are funded by the companies they rate. This has been admitted by a senior manager. I would normally choose a georg Grosz painting or caricature for a subject like this -for a change I've used James Ensor, the Belgian painter of the early part of the 20th century since the picture captures the corrosive characters of those set in judgement over us.
The reasons for a rate cut are now absurd: the challenge of reducing the fiscal deficit, the need for more money and the troublesome return to the financial markets in 2013 are topics being addressed by the government. By the Country. This rating cut doesn’t identify these challenges, it precipitates them. This decision carries with it severe and immediate consequences. Not only because Portugal takes one step backwards in the path back to the financial markets. But because many investors will now dispose of Portuguese assets. Because collateral on our debt will have to be reinforced. Because today all Portuguese assets lost value. Portuguese companies, Portuguese banks, everything lost value between yesterday and today. At a time when privatizations are being prepared. When stress tests are underway. There are no coincidences. Today, thousands of investors who’ve been short-selling Portuguese stocks and bonds are richer. Buying stocks in EDP and REN will now come cheaper. We’re not on sale, we’re being ransacked.
Portugal was a mad MAN, he threw himself into a cliff and now clings to a rope that was thrown in his direction. He’s trying to hold on with all its strength, lucid and humble in the way only those in ruin are lucid and humble. Then came Moody’s, spitting to the side and saying climbing the rope is tough – thus cutting the rope.
This is not about Portugal, it’s a matter of war between the US and Europe, it’s about profits for private investors in the shadow of ratings agencies. Two weeks ago, an outstanding piece by the journalist Cristina Ferreira, at newspaper “Público”, illustrated that corrosion. Another journalist, Myret Zaki, wrote the remarkable book “La fin du Dollar”, which documents the “system” on which these agencies thrive and the underlying euro-dollar tug of war.
Yesterday, Angela Merkel condemned the power of rating agencies and promised to fight back. In less than 24 hours came the response: S&P’s warning that the Greek debt roll over will be considered a selective default; and Moody’s rating cut on Portugal.
We’re in the middle of a scam and the European Union is impotent. Four years after the crisis that these agencies allowed, Europe has been unable to put out a recommendation, a threat, a European rating agency. What has China done? They created their own rating agency. What does that rating agency say? That Portugal is BBB+. That US debt is no longer triple-A. The Chinese have power and courage, Europe has hung itself in the American bargain-price shop.
The troika is worried about the lack of corporate competition in Portugal… What about competition in rating agencies? Two days ago, Stuart Holland put forward, along with Portuguese former Presidents Mario Soares and Jorge Sampaio, the proposition for a European “New Deal”. He told this newspaper “we need government governing instead of rating agencies ruling”.
We’re not asking for pity, we want fairness. Europe crosses its arms. Let us not do the same. The European Central Bank must stand up against to this despotism. In October, a report by the Financial Stability Board, led by Mario Draghi, advised private banks and the central banks to build their own models for assessing the eligibility of financial instruments, putting a stop to the mechanical evaluations made by rating agencies. Draghi will soon become chairman of the ECB’s governing council. He doesn’t need to terminate rating agencies, he needs to rise up in look into their eyes.
This rating cut is uncalled for, and it will cost us. Portugal is now Europe’s junk. Rating agencies are the undertakers, wealthy and euphoric, of a ridiculously impregnable system. The agencies assure us they don’t hold anything against Portugal. As the man said, “it’s nothing personal, it’s strictly business”. That man was a mob boss.