This is a better than usual piece in The Guardian about the credit ratings agencies. Better as it actually has facts in it for example. But they do quote a really stupid idea:
But in many other areas of the financial system, the agencies still wield tremendous power – power that many believe needs more regulation. \”The obvious solution would be to take this public service into public hands,\” Aditya Chakrabortty has argued in these pages. \”Let\’s have a ratings agency run by the UN, funded by pooled contributions from both lenders and borrowers … Let\’s make the ratings business a utility, rather than a semi-cartel that intimidates elected politicians and rakes in excess profits. It\’s time to break up the bullying double-act.\”
The reason this is stupid is that we don\’t in fact want the politicians telling us what the politicians are doing with our money. We\’d like some non-politicians to tell us what the politicians are doing.
Now of course, there are those who believe that the State can do no worng. But I would point you to the example of Argentina.
They have a number of bond issues where the interest payable is linked to the inflation rate. There is considerable suspicion that the official statistics agency is grossly under-reporting the inflation rate. From memory, saying that it\’s 10% ish when independents think it more like 25%.
And the Argentine Government is attempting to jail those independent economists for pointing this out.
No, I think we\’d really rather like to stay with a system where that free speech thing still applies, don\’t you?