During last two weeks, Moody’s downgraded debt rating for Portugal and Ireland, which spin to the default. The agency has also put on “negative outlook” (= 50% risk of decline in the short term) to Italy and the United States.
The reactions of governments have been very strong. President José Manuel Barroso challenged the methodology of rating agencies, which were “not infallible” and failed to properly anticipate the crisis of 2008. In Germany, Finance Minister, Wolfgang Schäuble, has criticized “the oligopoly of rating agencies.”
Indeed, there’s no monopoly of these agencies. China has created its own, a few months ago: Dagong. For the Chinese agency, France has lost its AAA long ago and had to settle for a AA- , only Switzerland remaining in the country rated AAA. (Previous report on The China Times.)
This seems much more serious note of the Western agencies, given the imbalance of public finances. Double standard?
For all these countries, the truth probably lies somewhere in between, but people can see the usefulness of a broader analysis – which can expose the biased eyes of the agencies.