Twice two - not always four, or how do American rating agencies work

Nowadays, a rare economic review does not mention one of the rating agencies. Moreover, in most cases, these agencies are American. These include Fitch Ratings, Standard & Poor's and Moody's. After the first crisis wave of 2008, the listed agencies somehow immediately too actively declared themselves. The key phrase here is “after the crisis”. In other words, before its attack on the world economy, in many countries they knew that there were some American rating services that assigned certain points to the economic potentials of certain states, but no more. Undoubtedly, painstaking work was done in the US rating agencies, which was usually aimed solely at keeping the ratings of its main sponsors at the proper level. And the most important sponsor, for obvious reasons, was the United States. It seems that, by the definition of a free economy, the state has no right to influence private financial institutions in any way, and even more so institutions of an analytical nature, but who said that these institutions are so private.

Questions about the credibility of the estimates, which allow themselves to stand Fitch Ratings, Standard & Poor's and Moody's, began to rise long ago. However, truly mass discontent with the work of these agencies was expressed only after their representatives defended the onset of the very crisis of 2008, which, apparently, does not let the world go until now. In principle, the word “missed” here is not entirely appropriate, because the leaders of these companies, naturally, imagined the possible consequences of a big gap in the US financial system. But how could they afford to bring their main donor, thanks to which their active “research” work was carried out for many years. It was the first crisis wave that was suspiciously unnoticed by the US rating agencies and made it very enthusiastic to announce a peculiar engagement of these firms. They say that the Americans let the crisis monster into the world economic sphere, having failed to deal with the 2008 banking impasse of the year, and their rating was still AAA, as high as possible. It is just the same as if a tennis player, having lost everything that could have been lost in the season, and even refusing to participate in a couple of tournaments, consistently remained the first racket of the world. That is, the persons who endowed him with such status simply could not afford to lower his rating, since he paid them well.

However, for a long time to keep in secret that the independence of the US rating agencies - just a big and beautiful soap bubble - failed. After numerous unpleasant statements against the same Moody's and Standard & Poor's, they nevertheless decided to try to wash off the "dirty" accusations of working for the American debt trap. These attempts were expressed in the fact that the US rating was for the first time in many years lowered from AAA to AA +, which caused an uproar in the US Congress. And this storm of indignation is easily explained. It is just that people who actively sponsor the creation of rating tables did not understand how they could live on their personal money and at the same time say that my sponsor’s solvency was shaken. This, at least, looks like a rude one, the representatives of the American authorities decided and attacked the rating agencies, which had decided to lower the financial status of the USA, the inspection bodies. Seizures of documents began in the offices of companies, accusations of incompetence, appeals not to trust the agencies and much more from the same series. And after that, someone else will say that corruption is a purely Russian prerogative ...

At first, after the US credit rating was downgraded, the Europeans even applauded the decision of overseas rating agencies, forgetting for a while that they had recently accused them of incompetence and bias.

But the joy for the European Union was too short, because, having lowered the rating of the States, the agencies decided to make up for their guilt before the sponsor and began to lower the credit ratings of European countries to the right and left. Even France and Austria, whose economies are fairly strong compared to others, have learned that the credibility of their financial systems has been lowered. The Portuguese and Greek levels were generally “drowned”. Today, for example, the Greeks in the "asset" is the SS rating (according to the S & P version), behind which only the default gapes. For example, Russia's BBB rating, which can be attributed to the classification of "stability" and "solvency."

The downgrade has affected 9 of European countries, and this list can be considered as not closed. After the Italian authorities learned that American analytical companies decided to lower their credit rating, they followed the example of their overseas colleagues and began to "wool" the offices of the "three American whales" of analytical forecasting of financial risks.

Why are some flimsy letters or numbers in the reports of rating agencies make the leaders of the states and the business elite so nervous?

The fact is that the lower the credit rating of a country, the more interest that country will receive new loans. Debt snowball from this will only increase. It is worth quoting one exponential phrase that was once uttered by an American journalist. He said that now, in order to destroy a country, it is possible not to introduce tanks - it is enough just to lower its credit rating. And this, in principle, is close to the truth.

The weaker the state's economy, the more difficult it is to find funds to repay liabilities to banks. However, it also happens that a decrease in the country's rating leads to a new development impulse. One example: the downgrade of Russia's rating from 1998 to BB to D is the default on government bonds. But since then, the Russian economy began to get out of the debt trap. Certainly, the rising prices for hydrocarbons also played a role, but this is one of the positive factors for Russia.

Following active actions to lower the overall rating of the European Union, the words were heard that it was time to once and for all abandon the use of information from US rating agencies. In Berlin, Paris and Brussels, they began to speak out in favor of creating a European analytical agency that would certainly accurately assess the level of positive or negative in the European economy. Like, in this case - no bias!

In Russia, they also decided to go this route. Vladimir Putin expressed the view that it would be nice to work on the creation of a Russian analytical agency, which, of course, will also be independent.

At the same time, for some reason neither the European nor the Russian authorities are talking about what to do with the already existing rating services. For example, in Russia, Expert RA has been operating since 1997 of the year, and the National Rating Agency has been operating since 2000 of the year. And this is not a complete list. The only thing is that Russian businesses often openly look at the work of these structures through their fingers. Therefore, for these agencies to be able to raise Russia's credit rating, Russia will have to first raise the rating of these agencies themselves ...

Yes, and whether such fecundity of analytical structures around the world will lead to a positive result. In this case, you can generally advise to create a rating service in each state. And let this service assign such a rating to the national economy as the government and business of this country would like. Only all this will lead to complete confusion, and they will no longer trust such ratings in the world at all.

Therefore, dreams of a truly independent rating agency remain only dreams, because any independence also wants to eat ...
Alexei Volodin
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