Sputnik — Fitch Ratings Revises Outlook for Russia to Stable

The outlook for Russia’s long-term financial risk rating has been revised from negative to stable and affirmed at ‘BBB-‘, Fitch Ratings said in a release on Friday.

Sputnik
Fitch Ratings Revises Outlook for Russia to Stable

TASS — Putin: Russia’s would-be rating agency should be really independent

The president said such an agency would be highly expedient, since the United States-controlled international rating agency were too biased.…

 Ya think?

Russia’s would-be rating agency should be really independent and enjoy confidence of all market players, Russian President Vladimir Putin said on Monday.
"It should be a really independent agency, which would enjoy confidence of all market participants," Putin said at a meeting with Russian Central Bank governor Elvira Nabiullina.

The president said such an agency would be highly expedient, since the United States-controlled international rating agency were too biased. "I remember our discussion with the former leaders of the European Commission when they expressed indignation at the actions of our American partners, saying that many assessments given by international, but in fact American, rating agencies are not objective," Putin said. "I remember only too well their indignation at such state of things. And back then, they said they would establish their own, additional, independent agencies. Russia must look at that too."…

China is developing its own rating agency, too. Lots of people are getting fed up with the antics.

TASS
Putin: Russia’s would-be rating agency should be really independent

William F. Engdahl — Russia and China: Watch Out Moody’s, Here We Come!

Over the past approximate quarter century of so-called economic globalization, Wall Street’s ability to be the home of the only dominant “global” rating agencies to bestow ratings on the credit-worthiness of the world has been one of the most effective weapons of financial warfare in the Wall Street arsenal. They rate nations as well as private corporations. Now an answer to the Moody’s-Standard & Poors-Fitch US rating monopoly is coming. Not from the EU, where it is long overdue. It is coming from Russia and China, as so many bold and challenging initiatives of late.…

Unlike the politically impotent EU, however, Russia today is not the Russia of the corrupt Yeltsin era of the late 1990’s. Vladimir Putin and China’s Xi have agreed to create their own international credit rating agency and it plans to open for business this year, 2015. 

The Universal Credit Rating Group (UCRG) plans to begin official independent ratigs in 2015 to challenge the Moody’s, S&P and Fitch ratings monopoly, according to RusRating Managing Director, Aleksandr Ovchinnikov. 

The new agency will be based in Hong Kong. Interestingly, there is a third equal partner to Russia and China in UCRG. In addition to China’s Dagon Credit Rating Agency, Russia’s RusRating the US-based independent Egan-Jones Ratings is partner in the new UCRG. Each member will hold an equal share in the venture, with an initial investment of $9 million. In effect, three already well-established national independent rating agencies form the new UCRG joint venture. It is a serious challenge to the New York Big Three monopoly. 

Egan-Jones Ratings Company, also known as EJR, founded in 1995 is a very interesting artner for Russia and China raters. It is unique among US nationally recognized statistical rating organizations (NRSROs) for being wholly investor-supported, not client-financed, eliminating the gross conflict of interest of the Big Three. On April 5, 2012, Egan-Jones was the first rater to downgrade the credit ranking of the United States. In addition Egan-Jones was also the first to downgrade WorldCom and Enron. 

The UCRG was officially created in June 2013 and has since been finalizing its business structure. Ovchinnikov added that, “When the issue of creating an agency alternative to the ‘Big Three’ was raised, we in fact offered a project that was ready to be launched and was supported by the governments of Russia and China.” He explicitly pointed to the bias of the US Big Three raters to be overly “generous” to US and EU clients while being biased against developing or emerging countries such as the BRICS—Brazil, Russia, India, China, South Africa. 

Now with an independent credit rating agency, a $100 billion BRICS Infrastructure Bank and strategic local currency agreements in place, Russia and China, Brics for Brics, are establishing the architecture to a genuine alternative to the destructive neo-colonial IMF and World Bank and the tyranny of the Wall Street dollar system. The year 2015 will indeed by interesting. Poor Mr. Soros might have to look for another job.

New Eastern Outlook
Russia and China: Watch Out Moody’s, Here We Come!
William F. Engdahl

See also, The Great Ratings Game: How Countries Become Creditworthy by David James Gill and Michael John Gill at Foreign Affairs (CFR).

AFP —China downgrades U.S. credit rating and accuses lawmakers of holding world hostage

A Chinese ratings agency downgraded its U.S. sovereign credit rating Thursday despite Washington’s resolution of the debt ceiling deadlock, warning that fundamentals for a potential default remained “unchanged.”

Dagong lowered its ratings for U.S. local and foreign currency credit from A to A-, maintaining a negative outlook, the agency said in a statement.

The announcement came after the U.S. Congress passed and President Barack Obama signed a bill that extends the nation’s borrowing authority and ends a two-week government shutdown.

“The fundamental situation that the debt growth rate significantly outpaces that of fiscal income and gross domestic product remains unchanged,” Dagong said in the statement, adding Washington’s solvency was vulnerable as old debts were still repaid through raising new debts.

“Hence the government is still approaching the verge of default crisis, a situation that cannot be substantially alleviated in the foreseeable future,” it said. 

Dagong made headlines in August 2011 when it lowered its main rating for US sovereign debt after Congress passed an earlier bill to raise Washington’s debt ceiling.

The agency, which is far less prominent than long-established Western competitors including Moody’s, Fitch and Standard and Poor’s, has been working to further raise its profile.

China’s official news agency Xinhua said Thursday in a bylined commentary that U.S. politicians had held the rest of the world hostage in the crisis.

The Raw Story
China downgrades U.S. credit rating and accuses lawmakers of holding world hostage

Agence France-Presse

— Exclusive: S&P Says U.S. Was Minutes From Falling To Rock-Bottom Rating By Leah McGrath Goodman

Key to making such decisions is John Chambers, the global head of S&P’s sovereign ratings committee and a member of the team, led by colleague Nikola Swann, that marked down America’s debt rating in 2011, from AAA to AA+. This time, if the House Republicans had not blinked, Chambers noted that S&P would have been forced to cut the debt rating again.

“If the government does discontinue debt-servicing, unless it is cured immediately, it goes into ‘selective default’,”said Chambers, citing S&P sources close to the heated talks in Washington. “Selective default” is the lowest of S&P’s 20 grades of untrustworthiness.

Newsweek
Exclusive: S&P Says U.S. Was Minutes From Falling To Rock-Bottom Rating
Leah McGrath Goodman

Massive idiocy! Fitch downgrades Britain!!!

These moronic rating agencies never learn do they?

After S&P's laughable downgrade of the U.S. two years ago you would have though Fitch would have learned something, but, NO! They downgrade Britain.

Once again the rating agencies PROVE that they don't understand the distinction between a currency issuing nation like Britain and a currency using like Greece or, Italy or, Spain or, yes, even Germany!
Britain can never, ever, ever, ever, default on its debts because all its debts are denominated in Sterling!

Here's what Fitch stated as its rationale for the downgrade:

KEY RATING DRIVERS
The downgrade of the UK's sovereign ratings primarily reflects a weaker economic and fiscal outlook and hence the upward revision to Fitch's medium-term projections for UK budget deficits and government debt. Despite the loss of its 'AAA' status, the UK's extremely strong credit profile is reflected in its 'AA+' rating and the Stable Outlook.

- Fitch now forecasts that general government gross debt (GGGD) will peak at 101% of GDP in 2015-16 (equivalent to 86% of GDP for public sector net debt, PSND) and will only gradually decline from 2017-18. This compares with Fitch's previous projection for GGGD peaking at 97% and declining from 2016-17 and the 'AAA' median of around 50%.

- Fitch previously commented that failure to stabilise debt below 100% of GDP and place it on a firm downward path towards 90% of GDP over the medium term would likely trigger a rating downgrade. Despite the UK's strong fiscal financing flexibility underpinned by its own currency with reserve currency status and the long average maturity of public debt, the fiscal space to absorb further adverse economic and financial shocks is no longer consistent with a 'AAA' rating.

Check out the highlighted part. "gross debt to 100% of GDP." They must be using Reinhart and Rogoff, still, even though those two have just been shown to be charlatans!!! LOL!!! Unreal!!!

Fitch...YOU SUCK!!!!

Mark Joffe — Moody's, S&P and other credit rating agencies deserve a failing grade

The traditional credit rating business is broken. Perhaps there is a way to use open source models to fix it.

The Guardian (UK)
Moody's, S&P and other credit rating agencies deserve a failing grade
Mark Joffe

Bill Mitchell — Ratings firm plays the sucker card … again

Bill excoriates Moody's for the UK downgrade and George Osborne for lying about it. Reinhart and Rogoff come in for criticism too.

Bill Mitchell — billy blog
Ratings firm plays the sucker card … again
Bill Mitchell

The Economic Maverick — BOLLOCKS! Moody's Downgrades UK debt for first time in history. Blames AUSTERITY!

What is most notable about the UK Debt downgrade is not the downgrade itself, but the text. Moody’s is NOT attributing their downgrade to the usual mantras from the austerity caucus such as “fiscal profligacy” and “bond market vigilantes.”Instead they are blaming “slow intermediate term growth” and, most importantly, blaming that slow growth on “the ongoing domestic public- and private-sector deleveraging process.”

Obviously, as the MMTers know too well, concerns of a technical default are misplaced because the UK, (like the US, Japan, Canada, Australia, Switzerland, etc) is an autonomous fiat currency issuer and therefore can’t default on its debt unless it chooses to do so. However, implied in the text are the exact concerns that non-austerians of all disciplines have been repeating incessantly: Austerity in a downtown [down time?] is counter-productive even to the goal of reducing public debt because it hinders growth and therefore impairs the capacity of the economy to generate revenue and repay the debt. This is doubly true after a credit bubble bust because the private sector is deleveraging in an effort to fix its own debt problems. Any efforts by the public sector to simultaneously deleverage will backfire.

The Economic Maverick
BOLLOCKS! Moody's Downgrades UK debt for first time in history. Blames AUSTERITY!

Marshall Auerback — Credit Ratings Agencies Are Pimps of Wall Street: It's Time to Ban Them!

Firms like Standard & Poor, charged with fraud by the DOJ, are criminally incompetent and serve no public purpose.

AlterNet
Credit Ratings Agencies Are Pimps of Wall Street: It's Time to Ban Them!
Marshall Auerback
(h/t Charles Hayden at Facebook, MMT Deficit Owl USA Committee)

Did unethical conflict of interest result in the rating agencies becoming complicit in control fraud?

Bill Mitchell — The moronic activity of the rating agencies

Ouch. Bill takes Fitch et al to the woodshed, Fitch just being the latest. S&P still wears the biggest dunce cap.

Bill Mitchell — billy blog
The moronic activity of the rating agencies
Bill Mitchell

Time to shut the rating agencies down!

The rating agencies are clueless and have already done enough damage. Time to shut them down!

Wall Street criminality rolls on with no one held accountable

They're not going to stop until they have control of everything and we have nothing. That's because there is zero fear of punishment as the lawmakers, judges, prosecutors and cops are all bought.

Ramanan — The Monetary Economics Of Sovereign Government Rating

In this post, I will attempt to describe the dynamics of defaults and restructurings by going through some monetary economics of open economies.

Read it at The Case of Concerted Action
The Monetary Economics Of Sovereign Government Rating
by Ramanan

Ramanan does publish comments at his place, and this is really a seminal post, so have it here.

John Carney — The War On S&P Has Begun

John is hot on it today.

Read it at CNBC NetNet
The War On S&P Has Begun

by John Carney | Senior Editor

Ramanan — The Monetary Economics Of Sovereign Government Rating

Ramanan criticizes the MMT claim that imports are benefit in real terms and trade deficits don't matter as long as other countries desire to save in the importer's currency, because floating rates ensure market clearing and a currency sovereign is not constrained operationally in its own currency.

Read it at The Case of Concerted Action — Post Keynesian Ideas For A Crisis That Conventional Remedies Cannot Resolve
The Monetary Economics Of Sovereign Government Rating
by Ramanan

Ramanan has a comments section at The Case of Concerted Action, where I expect one can count on his responding to reasonable criticism. Comments welcome here, of course.

US 10 year breaks 2%

US bond yields fall to historical lows. Rating agencies continue to be out to lunch and don't notice that the bond vigilantes are ignoring them.

Bloomberg: Treasury 10-Year Yield Below 2% as Europe Debt Crisis Fuels Refuge Demand

Moody's gets moody

Moody's Investors Service on Wednesday warned that its top credit rating for the United States could be in jeopardy if lawmakers backtrack on $1.2 trillion in deficit cuts planned over 10 years.

The ratings firm said the failure of a U.S. congressional committee to reach an agreement on deficit reduction did not affect the Aaa rating, but any pullback from agreed automatic cuts to take effect starting in 2013 could prompt it to take action.

"While a change in the composition of the spending cuts would not be a major rating consideration, a reduction in the total amount that would increase the projected increase in federal debt over the coming decade could have negative rating implications," Moody's said in a statement.

Read the rest at The Huffington Post (Reuters article)

Moody's Warns United States Must Stay Serious About Deficit Reduction

Someone wake up the bond vigilantes and tell them that Moodys is concerned.

Hello, yields are hitting historical lows.

I sure hope the folks at the rating agencies don't trade bonds. Or maybe they do and are sowing disinformation. Pathetic. Looks like they are spending so much time over at Zero Hedge they are unable to distinguish reality anymore.

Moody's says US rating may be cut if debt limit not raised

Moody’s finally realizes that “willingness to pay” is as important a factor in credit rating as “ability to pay.” The U.S. has no hindrance on its ability to pay, but it has shown a definite willingness to not pay with the debt limit shenanigans.

Moody’s Says U.S. May Be Cut If No Progress on Debt Limit By John Detrixhe and Heidi Przybyla June 2 (Bloomberg) -- Moody’s Investors Service said it will put the U.S. government’s Aaa credit rating under review for a downgrade unless there’s progress on increasing the debt limit by mid-July. “The heightened polarization over the debt limit has increased the odds of a short-lived default,” New York-based Moody’s said in a statement today. “If this situation remains unchanged in coming weeks, Moody’s will place the rating under review.”

The full arrogance of the ratings agencies on display

Just watched some guy from S&P being interviewed on CNBC. Steve Liesman asked him if he thought that the probability of a default by the U.S. had just increased. The guy said, "yes." Then Liesman asked him to explain how the U.S. can default when it issues its own currency and when its debts are denominated in its own currency. The guy basically couldn't answer. He pretty much said it didn't matter and spoke about a "rich history" detailing the problems of countries with high debt, failing to make any distinction between what nations in that rich history were under gold standards or fixed exchange regimes (all). Then he just said "we do not accept the idea that a country with its own currency, treasury and central bank is immune to debt problems."

Now that's arrogance for you. Since S&P simply cannot accept the idea, they will rate on the basis of their misguided belief and bias. Ordinarily that would simply be a reason to laugh at them and see them for what they are: a bunch of arrogant and elite functionaires. Sadly, though, policy makers, investors and others listen to these idiots and their ratings and pronouncements, which means this will have a real impact on people.

I worked at S&P back in 2000 and was basically fired after getting into an argument with chief auto analyst Scott Sprinzen after I wrote a highly negative article about General Motors, whose stock was trading at 80 per share at the time. I questioned GMs outlook and the rosy assumptions that they were making for their finance unit. Sprinzen took exception to this saying that GM was strong and would not have any problems. Well, I was forced to resign.

Fast forward: GM went bankrupt and had to be saved by taxpayers. Sprinzen is still there at S&P. I am not.

These agencies have been conducting business for years despite the fact that they operate with huge conflicts of interest. They are paid by the entities they rate so there is massive incentive to make things look rosy when they are not. They are protected by the government and have no competition. This has made them arrogant to an extreme, as exhibited by the jerk being interviewed on CNBC. Sadly, nothing will be done to reign them in or make them more accountable for their ratings.