The ratings are relative. Many other countries have even worse vices than Britain, and fewer virtues.
The US - the world's biggest economy - was downgraded from its AAA rating last year, a move that has not materially changed its borrowing costs.
Gee, not a word about sending armies around the world to fight two wars.
Gee, not a word about not paying for sending armies around the world to fight two wars.
Also not a word about how a capitalist economy works where a Balance Sheet Recession has developed and it reaches systemic proportions.
2008 - 33 billion pounds
2009 - 38 billion pounds
2010 - 40 billion pounds
2011 - 40 billion pounds
2012 - 39 billion pounds
Plus draining off young men and women at the prime years, where there was no credible connection to beating down Al Qaeda.
In the balance, in fact, the Abu Ghraib catastrophe overturned any and all alleged benefits from those two wars. (Binladen could have been killed with Special Forces troops and no war in Afghanistan, period.)
And the Tory economic program of cutting taxes to raise deficits has accomplished nothing apart from the usual class warfare. This nonsense drove the recession further down as clearly balancing budgets didn't matter.
Have I missed something?
Credit rating agencies seem to me to be typical of those banker's once
famous for loaning you an umbrella and asking for its return when the
rain falls. They hold your bad rating until you are in a state where it is
redundant to say so. The bad rating only serves one belated purpose.
It makes money too costly to borrow which would have been appropriate
ten years ago and perhaps might have applied the brakes before the car careened over the cliff.
Spending on government wealth transfer programs characterized as "investments"... That sounds oddly familiar.
P.S. Or would that be underinflated currency?
I agree - the West is broke, and sooner or later its overinflated currency, which is nothing more than an agreed upon fiction, will be worthless. You want to pay $1,000 for a Chinese made toaster? It will happen, soon enough.
Brilliant, Tom Welsh! Unfortunately, counter to your contention, some things cannot be changed with all the money in the world, such as acts of irreversible, unspeakable atrocity committed against people, esp. babies and children.
Dead or violated people cannot be quickened or restored to innocence. Values, taste and character cannot be bought. And souls cannot be purchased, except by the Devil, and he's a lousy salesman to some.
Sure, too many humanoids will do the sleazy thing for money and perversion, as you've no doubt witnessed. Some of the clever ones worship evil to justify their ways, doing Luciferian rites and rituals in robes and other "sexy" snuff stuff. Still, there are always real men and women out there who are not material proles or slaves to the dark. There are even warrior angels of mercy and justice who battle base evil.
That "social engineering" by "elites" you mention is mere psychotic conceit masking a zero-sum deadly game they play in which those who acquire dirty or bloody money attempt to ruin others in order to feel better about their sorry selves and to protect their caches, stashes, islands, yachts and planes.
The sociopaths are never conscience-stricken, but those with a modicum of IQ often objectively realize they're scum, and so need to degrade and debase others to pretend they're on top of the world. And, since the sum of their existences is the sh*t, power and popularity they immorally acquire, their stolen stuff and status must be protected at all costs (any semblance of their humanity at this point be damned.)
They're bottom-feeders in the bottom ring of gilted hell, but, hey, it's shiny and there's music to dance to! All their friends and hangers-on have a good time until they realize they can never leave, for they're constitutionally incapable of renouncing bloody, greedy evil.
Moody's was one of the main profiteers in the American housing bubble. According to author Lawrence McDonald, a former vice president in the former Lehman Brothers, Moody's revenue went from $800 million in 2001 to $2 billion in 2006. "The exploding profits were fees from packaging and for granting the top-class AAA ratings." After 2006, three-fifths of the mortgage-backed bonds were downgraded. Moody's fees were paid by the bond issuers rather than the bond buyers. This creates the same cash nexus between Moody's and bond issuers as existed between Arthur Andersen and Enron, and exists between a hooker and her john. Can anyone here advise me as to whether the UK central bank pays fees to Moody's for bond ratings? Or is Moody's subject to any sort of regulatory pressure by British bureaucracy?
Well said, Stuart! Unfortunately, our society is soluble in money - just as our body chemistry is soluble in water and fat. Money can accomplish almost anything, and if you have enough money you can change or prevent anything that you don't wish to happen. Thus accountants and economists dance to the tune of those who pay them. The nearer you get to the top of government, and the peak of society's wealthiest elites, the more money there is available for "social engineering".
The UK like the West in general is broke.
Few could repay the debt if they actually wanted to, the future obligations for health and pensions blow the possibility out the water anyway.
Populations are ageing fast and by 2020 most will have more people over 65 than 0-14 years old.
Government will have to shift more taxes onto assets, as increases in taxation will just make it not worth the young working full time or overtime. In shifting taxes onto assets the young in an ageing world will find it both monetarily harder to acumulate assets from their after tax income and when they do they will pay proportionally more taxes than previous generations.
The 1970's "population Bomb" may prove to be a bomb we made ourselves at home with pills and condoms and the fuse is about at the explode stage. In my masters degree I read a book on the coming demographic bomb (1990/91), so we have known it was coming.
I also recall a Monty Pytheon (I think) sketch about an office of old clerks taking on the world.
NOW is the time to do what has to be done. Get the actuaries and accountants to work out the exact debt, funding expenditure needed and the tax required to pay for it. Cut welfare to what is affordable, reduce expenditure, repay debts and raise the age of retirement. It is hard and would be hated but a Thatcher or Reagan type is needed in most Western nations to implement a radical change! Or we coudl just smile, cut interest rates and hope it all goes away; just as we are now.
Moody's can be irrationally exuberant but subject to swings on a whim. Did the UK recently turn it down for a date or something?
Question: "How could a company dedicated to evaluating credit not understand that? (that is; "the whole house of cards would collapse.")
Ah ... Moody is bereft with bureaucrats, like governments, and not entrepreneurs?
Even more so if you substitute the words Bush, Obama and United States for Blair, Brown and Great Britain.