- Patrick Young
- RT: Moodys’ Portugal Debt Evaluation
- rt.com
Summary
The EU is at a cross roads. Top level political criticism by the likes of German Finance Minister Schauble of the right for ratings agencies to speak freely does not portend towards the EU being an open and dynamic project.
Rather the worry is that the EU establishment is going backwards in terms of all rights when faced with a financial crisis which they themselves helped create.
Analysis
The EU has already bent rules left right and centre to allow the bailout mechanism to exist. Meanwhile, a German court challenge could yet create problems with the EU’s attempted financial hegemony over nation states.
The EU political classes fear that selling central banks’ gold reserves would be somehow unreasonable. It is curious that closing the libraries beloved of hard working Germans is seen as fine in the new European order but selling the assets of the debtors is somehow to be avoided for reasons of political niceties that the EU does not observe in the breach elsewhere. It is even stranger that Mr Schauble seems to be so far removed from reality he does not appreciate just what a mess Germany has got itself in to in order to protect the replacement to the perennially strong German Mark.
(qv Note how pressurising an Italian off the board of the ECB is fine but actually having Greece and Portugal raise some much needed cash to settle their debts is apparently a step too far under the currently confused EU position…).
Meanwhile the Moodys downgrade has raised the ire of the EU. They previously have been keen to, er, downgrade the ratings agencies because their ratings were inaccurate.
Intelligent investors know that ratings are purely an indicative guidance tool. Curiously ministers seem to loathe the idea of a Portuguese ratings downgrade having previously pilloried the self-same agencies for being too lenient on markets in the good times! The EU has backed the ratings agencies into a lose lose situation when the key failing of the agencies was to be carried away with the political classes deluded Euro-euphoria…
The most charitable conclusion to be drawn from this issue is that the EU has become a little muddled due to the stress of not managing the Euro particularly well.
Less charitable conclusions have been drawn by the likes of Ambrose Evans-Pritchard in the Telegraph and they infer worrying parallels with the worst excesses of Europe’s most foul totalitarian regimes.
The EU dithered for years while believing their own ‘nirvana propaganda.’ Given the current crass and dictatorial flailing at messengers by EU leaders, the problem is that where the Euro ought to have had a fighting chance of survival, now the position is one where the currency is likely to be sabotaged by the utterly incompetent ‘management’ that overlaps at the top of the EU itself.
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