By Ray Fleming
THE damage is done so the priority is to deal with it as constructively as possible. Even so, as the stock markets plunge downwards and double-dip talk is everywhere to be heard, it is important to make a note that the role, integrity and competence of the private American credit rating agencies such as Standard & Poor's and Moody's & Finch should be examined at the first practical moment. S&P's track record in recent years does not entitle it to put the future of millions of Americans at risk, still less that of multi-millions of people around the world. In 2008 S&P gave Lehman Brothers an A rating shortly before its collapse played a major part in the following global recession.
In last week's downgrading of the United States one of the reasons given by S&P was not financial at all but political in questioning the effectiveness, stability and predictability of American policymaking.
When I first raised this subject a few weeks ago I suggested the International Monetary Fund should take on this responsibility. Now there is a proposal from a Cambridge economist that governments should ask the United Nations to set up an independent credit-rating agency for national assessments.
Whichever. The important thing is that judgements of such importance should not be in the hands of private companies with their own agendas.