Free speech is just so neoliberal

The Fitch ratings agency announced overnight that:

Fitch Downgrades Mexico to ‘BBB-‘; Outlook Stable

For those unfamiliar with rating agency nomenclature this means that Mexico’s debt is now just above what is called ‘junk’ status.

This is profoundly unhelpful. At a time when Mexico, like almost every Latin American country, is facing the challenge of coronavirus and a pile of US dollar debt over which it has almost no control as to cost, it is facing a rating agency saying that the cost of its debt servicing must basically increase through no fault at all of its own.

Well, no, it doesn’t actually say that. The cost of debt servicing is the coupon agreed at time of issuance. That’s not changed in the slightest.

The cost of borrowing more, that has risen, yes. But just because governments like to roll over their debt doesn’t mean that there’s not a difference between these two things.

This is argument that this can best be described as callous: Fitch is very clearly putting the interests of creditors above the lives of the people of Mexico.

It can also be described as profoundly unjust: developed country debtors will profit from the crisis at cost to a developing country.

It could be argued it represents a failed paradigm when governments are all that are now underpinning capitalism but are being downgraded in the interests of rentier capitalists, nonetheless.

But most it could just be called wrong. It is a symbol of all that is profoundly misguided, amoral and exploitative in the world of financial capitalism.

I suggest that the rating agencies be subject to enforced silence on government debt right now.

Or as this should be translated – I don’t like what people are saying so we must ban them from saying it. For that free speech thing is just so neoliberal, isn’t it?

30 thoughts on “Free speech is just so neoliberal”

  1. In the real world Fitch’s downgrade will cause losses for those of Mexico’s creditors holding its market-listed bonds as the price of those bonds will go down. As Tim points out Mexico’s costs will be unchanged – unless it buys in some of the downgraded, hence cheaper, bonds prior to maturity thereby making a profit. Developed country *creditors* (the “debtors” is a typo) will suffer from the crisis.
    Murphy has got it the wrong way round, as usual.

  2. If being profoundly misguided were reason enough to close down an information stream, then should that also apply to terraced houses in Ely?

    Besides which, if budget deficits are fine anyway, a higher interest rate won’t matter, will it?

  3. Since the interest payments are unchanged by this what is he worried about? Is this an unsuspected conversion to the viewpoint of investors?

  4. “developed country debtors will profit from the crisis at cost to a developing country.”

    Does he mean developed country creditors?

    “Developing country” has got to be the most obnoxious euphemism since we started calling window licking stupidity “learning difficulties”, and dark-eyed, quick-tempered Dwarven people “the Welsh”.

    They’re developing, you see. Gonna be developed, any day now… pay no attention to the guys being beheaded by a cartel enforcer with a chainsaw. Developing.

  5. So he is suggesting that the pension funds on which hundreds of millions of people depend for their retirement should not be alerted to the obvious fact that a deranged LatAm leftie (called AMLO in this case) is sending his country down the tubes? In this case so badly that even the FT noticed it in a leader yesterday?

    Wouldn’t that rather nullify the point of a ratings agency?

  6. Judging by the registration date and host (1&1), I guess this will be where Ritchie’s new project will appear:

    Probably soon to be filed under the stunning successes of his other web “ideas”:
    “What did tax do for you today” – https://www.t* (he got to #4 then gave up)

    + the FTM which isn’t quite dead, mainly because Ritchie doesn’t run it any more

    I’ve probably forgotten some as well.

  7. Isn’t he predicting the next financial disaster every 5 minutes?

    How are those actions any more or less responsible than those of any ratings agency?

  8. He’s saying that the credit agencies should give a false report on their opinion of a country to repay debt?

    I bet 10 years ago he was calling for their heads for giving an incorrect opinion on those dodgy A rated mortgage bonds (or whatever they were).

  9. Dennis, Bullshit Detector

    I suggest that the rating agencies be subject to enforced silence on government debt right now.

    So evidently in Spud’s Brave New World markets function better with less information and more uncertainty. Who knew?

  10. The Meissen Bison

    Fitch is very clearly putting the interests of creditors above the lives of the people of Mexico.

    That’s the business they’re in. The world needs an Archewell Rating Agency to redress the balance.

  11. The Pedant-General

    Because markets always work much better when adverse information is artificially suppressed. NOT.

  12. Bloke in North Dorset

    This is one of those 2nd order effects the Spud doesn’t think exist:

    Mex (or any other) Govt: Hi markets, we’d like to borrow some money?

    Markets: We’d love to but we’ve no way of valuing your bonds, so not thanks.

    Mex Govt: But we really need the money.

    Markets: OK, but your last rate plus, lets say, 20% to be on the safe side.

  13. No doubt Spud will say he previously forecast the economic damage caused by Covid despite the fact he didn’t forecast Covid

  14. BlokeInTejasInNormandy


    I find myself at odds with you on that piece.

    It is far from barely coherent.

    It is incoherent. And, as usual, states opinion as real world fact.

    One suspects that the author has never done an honest days work in his/her life.

  15. Is there a Murphy’s Law?
    You know, the one that says any pronouncements are going to be wrong, or arse-about-face.
    How can this ignoramus be employed at Goldsmiths (unless as a janitor perhaps)?

  16. @ BITIN
    I disagree – there are coherent bits such as the claim that doctors are part of the impoverished working class; that the point of primary education is not learning the three Rs but competing against other children; that work can only be exchanged for money in physical proximity to the employer/hirer; that capitalist markets are united in agreement that …
    Apart from markets being formed by people who differ – otherwise there wouldn’t be a market – all the things they are supposed to agree are just plain wrong because wages have (except where government influence things) been set by market forces and mutual agreement between workers and employers. The existence of unions should add to pressure to pay workers an adequate wage so the author presumably believes that unions are useless and the CWU has been striking for the wrong reasons. He’s never heard of working from home. He doesn’t want children to be literate and numerate.

  17. I was struck by this paragraph

    In practice, we can already see how dependent we are on platforms such as Amazon, Whatsapp and Facebook, and how much more dependent we become once non-digital markets and spaces are restricted. These are truly social utilities, which ought in principle to make them targets for collective ownership. But with their unprecedented calculative and surveillance capacities, they also offer a corporate-led alternative to neoliberalism (as I discuss in this paper), which renders ‘social value’ calculable in the ways that Neurath hoped socialism would do in the 1920s, but which free marketeers have always denied is possible. Platform social-ism is an entirely viable future model for our economy, which may alleviate a social crisis but exacerbate a democratic one

    Is he even wrong? I wish I knew more about alibaba because, on the face of it, it invalidates his point and yet…. Just how does alibaba work?

  18. @Diogenes

    Alibaba, Amazon, eBay etc allow the proles to circumvent State “trade deal” controls on what can be purchased from anywhere

  19. At last, the worm turns and Peter Hitchens and I are not alone:

    Yesterday: “Hancock needs to be emotional and weep to see he’s wrong? Twat

    I said last week the rule was wrong and evil – no emotion or weeping involved, only some empathy & kindness”

    13 Apr: I named him “Kindergarten Gruppenführer Hancock”


    Hancock’s political antenna, finely honed under the tutelage of that other wily operator George Osborne, picks up more signals than the Hubble space telescope. If there is a criticism it is that he sometimes lacks empathy
    He can speak compassionate words but they rarely sound particularly cuddly. When you hear Hancock talk of taking the fight to this disease, you find yourself wondering what he’s working to hardest to save: people’s lives or his own career?

    and J SP

    Matt Hancock’s meltdowns have revealed a mediocre minister who’s out of his depth running anything more complicated than a kindergarten
    This morning the government’s carefully constructed strategy for dealing with coronavirus fell apart when Health Secretary Matt Hancock lost his temper in two media confrontations. First, a feisty exchange with the Today programme’s Nick Robinson, and then on ITV’s Good Morning Britain he exploded in a combative exchange with Piers Morgan.
    Two meltdowns in less than an hour make a PR disaster for the caring Conservatives, the people who say we are safe in their hands, and on the day when more bad news – an extension to lockdown – will be announced.
    Mr Hancock is incandescent because people are daring to ask (if we are to be confined to home for another 21 days) – what’s next? Does the government have a Master Plan, an Exit Strategy? When can schools reopen, businesses go back to work…or like Brexit, will this exit go on forever? According to one Minister, Nadine Dorries, it could last until there’s a vaccine next year. By then the UK will be bankrupt.
    A few weeks ago, Matt Hancock said the government would be inclusive and clear in it’s approach, but today he seemed to have forgotten those words, complaining ‘everyone wants to know what the future looks like…but talking about it would send the wrong messages’
    This morning we could have been listening to official broadcasting in China or North Korea – a government minister telling the public that too much information is a bad thing, that only politicians will decide when to reveal the next step in this battle with a fatal disease. A battle that not only affects human life but is also decimating our economy and could bankrupt the country.
    For three weeks now the government have been treating the public like children, dishing out the same simple messages over and over again
    Stay at home, don’t go out, wash your hands, observe social distancing – do all this to protect Our NHS and save lives

    “Health Secretary Matt Hancock appears on GMB to talk about the ramping up of coronavirus testing in the UK. Piers and Susanna question the minister on how and when the lockdown will end and whether NHS workers have the PPE they need to keep safe. Mr Hancock also reacts to Jacinda Ardern, the Prime Minister of New Zealand, taking a 20% pay cut to show solidarity with those on furlough and having financial difficulties”

    I chat with a few top TV news journalists and we all agreed this morning that we could never recall a time when both the government and opposition ranks seemed to be so lacking in calibre, with the honourable exception of Chancellor Rishi Sunak who has been commendably authoritative during his press briefing stints.
    Nobody pretends this is an easy time to be running the country, or any country.
    But it feels increasingly, disconcertingly evident that many of the people charged with doing so in Britain don’t have a clue what they’re doing

    The [2016 Pandemic] exercise also exposed a chronic lack of basic equipment to fight such a pandemic – including PPE for health workers, ventilators and critical care beds.
    Yet despite all this, when the exact kind of deadly new flu pandemic they were talking about actually happened, Britain remained chronically short of PPE, critical care beds and ventilators.
    So much so that Matt Hancock was forced to beg British manufacturers on March 14 to make the latter for him.
    ‘If you produce a ventilator,’ he told them, ‘we will buy it. No number you produce is too high.’
    And what’s been the result of this plea?
    A complete and utter fiasco that perfectly exemplifies the government’s incompetence.
    Today’s Financial Times revealed that the minimum specifications set out by the government to the manufacturers to make these ventilators rendered them useless.
    Alison Pittard, dean of the Faculty of Intensive Care Medicine, the professional body for intensive care practitioners, said the government requested ventilators that would stabilise patients only for ‘a few hours’ when in fact they are required for much longer periods of time.
    ‘If we had been told that was the case,’ she said, ‘that the ventilators were only to treat a patient for a few hours, we’d have said: ‘Don’t bother, you’re wasting your time, that’s of no use whatsoever.’
    As a result of that shameful failure in basic planning, many of the ventilators made cannot now be used.
    This is just the latest in a series of appalling mistakes.
    Meanwhile, we are told every day to stay home, protect the NHS, save lives and little else.
    Not a word about how they are going to get us out of lockdown, allegedly because we, the dumb public, can’t be trusted to stick to the lock-down rules AND contemplate an end to it

  20. He’s clarified on a downgrade:

    “The owners of debt gain. Developing nations pay. I could not be clearer”

    How can such an simpleton be let anywhere a university teaching role? He literally posts whatever comes into his head on his blog. Absolutely oblivious to his lack of understanding of anything.

  21. facing a rating agency saying that the cost of its debt servicing must basically increase through no fault at all of its own.


    Who set up the conditions whereby the ratings agency lost faith in Mexico’s ability to repay its loans?

    Mexico, right?

    The ratings agency is just reporting on its findings. The rating’s agency giving Mexico a shitty rating does not make the Mexican government a riskier investment. The Mexican government being a risky investment got the rating.

    Shit like this is why no one in government – even the crazies in Labour – will listen to the dude. How in the hell does anyone credible still employ this man to teach?

    He’s an open fascist and he gets basic cause-and-effect backwards.

  22. . . . developed country debtors will profit from the crisis at cost to a developing country.

    I’m pretty sure Mexico is not lending money to the developed countries.

    But even if they were – why the sudden shift to taking the side of the creditor now? Not too long ago he was talking about how landlords should be utterly shafted for the benefit of renters.

  23. i thought governments could just magic up the money without any ill effects according to mmt. Mexico can just magic up millions of pesetas or set the printing presses to turbo max to pay off any creditors. Easy peasy.

  24. The worm turns on Kindergarten Gruppenführer Hancock Pt II

    – “Attempts to quiz the health secretary over criticisms of the government’s procurement of ventilators for coronavirus patients have descended into an outlandish spat on morning television.

    The government’s request for ventilators which would stabilise patients “for a few hours” at minimum has been condemned as “no use whatsoever” by the UK’s professional body for intensive care practitioners, the Financial Times reported on Wednesday.”

    FT Front Page Article below

    No surprise, I said weeks ago Dyson et al wasting time and money as approval would be delayed/denied. Think of those NHS/PHE seniors with early retirement and Director of Acme BioVent lined up. Then along come Gtech with a £10,000 not £1 Million ventilator

    More on Kindergarten Gruppenführer Hancock

  25. NHS/PHE Mgt: Private Sector bad

    FT Front Page Article
    UK’s new ventilators still awaiting regulatory green light

    Delays linked to changing clinical understanding of how to best treat Covid-19
    None of the new mechanical ventilators developed for treating coronavirus patients have obtained UK regulatory approval, a month after the government issued a rallying cry for British industry to help plug a shortage of the devices.
    Officials have given conditional commitments to purchase tens of thousands of the life-saving machines which assist patients with respiratory difficulties, subject to safety tests.
    In addition to imports and established medical device makers increasing domestic production, big-name UK engineering companies are finalising ventilators designed from scratch and modifying existing products.
    However, the new models — which include one by Dyson — have yet to receive the green light from the Medicines and Healthcare products Regulatory Agency (MHRA), according to a government official.
    Among equipment awaiting clearance is a tweaked version of a machine already manufactured domestically by Penlon in Oxfordshire, which is in the final clinical stages, according to people aware of the matter.
    The Cabinet Office confirmed at the weekend that it had withdrawn support for a ventilator under development by a collaboration of Formula 1 teams, called BlueSky, “following a reassessment of the product’s viability in light of the ever developing picture around what is needed to most effectively treat Covid-19”. In a letter of intent, the government had provisionally ordered thousands of machines from BlueSky.
    “We are continuing to work at unprecedented speed with a number of other manufacturers to scale up UK production of ventilators,” it added.
    The delays appear to be linked in part to the changing clinical understanding of how to best treat the disease amid disagreements within the medical profession about when to deploy invasive ventilation for coronavirus patients.
    In a sign of the fluidity of the discussion surrounding the ventilator production, the Department of Health on Monday posted an announcement notifying potential manufacturers that it was “currently updating” the specification for the Rapidly Manufactured Ventilator System scheme.
    “Until the new specification is available you should continue to follow the guidance in this document but be aware of changes to follow,” the notice added.
    Government sources said officials would further narrow down the shortlist of potential manufacturers on Tuesday in light of the new guidance.
    A government spokesperson said: “Designing and manufacturing a ventilator from scratch usually takes years, but in the four weeks since Ventilator Challenge was launched, we have made rapid progress, with new designs currently being tested by clinicians to ensure they meet the necessary standards for patient safety and effectiveness of treatment.”
    Yet the delay also casts doubt on the preparedness of the National Health Service to cope with the peak of cases and follows criticism over a lack of personal protective equipment, such as gloves and masks, for frontline staff.
    Health secretary Matt Hancock told the BBC’s Andrew Marr Show earlier this month that 18,000 ventilators would be needed in the coming weeks, down from an original target of 30,000.
    The NHS now has access to 10,120, including 200 it acquired last week and up from 8,175 in mid-March. Germany is donating 60 ventilators and US president Donald Trump has said the British government asked Washington for 200.
    One Whitehall official insisted there was adequate intensive care capacity. “There is early evidence of ICU admissions levelling off. We have plenty of ventilator beds across the country so there is confidence that we can meet demand,” they added.
    Alison Pittard, the dean of the Faculty of Intensive Care Medicine, which represents intensive care professionals, confirmed that the medical profession had initially requested that UK industry focus on making simpler ventilators for the early-stage treatment of Covid-19 patients.
    The decision was taken after patients in Italy were not found to need highly specialised ventilators in the early stages of their condition, and in recognition of the fact that non-specialist manufacturers would not be able to make high-specification machines at speed.
    “It was decided that patients in early stages would go on to simple ventilators, and if they needed to go on for a prolonged period, they would be switched up to another [more sophisticated] device,” she said.
    One senior intensive care doctor warned that a fixation on ventilator numbers was not helpful, however. “In terms of providing intensive care beds, it’s not just ventilators,” they said. “You need more equipment, hemofiltration machines, [and] staff as well.”

    Exactly what I forecast: Dyson, GTech etc wasted their time and money. UK Formula 1 Project Pitlane realised hoop jumping imperative and had sample Pressurised Breathing Aid fast-track approved by MHRA before production

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