Down with the old economic truth ...welcome to the new (old) economic basics ... time to look at Production (real production) and to competitiveness, take a look at people and work hard, promote the ability to coordinate efforts, to plan ahead, to innovate, to induce collaboration and value the ones who create the conditions to grow in a sustainable way, giving the new motivation a chance to be contagious and finally to achieve results ... we might be surprised about what we will find and with what we can do.
The Ratings are reflecting it the wrong way. Why?... when they can make it work, measuring it the other way...
When a country accumulates sovereign debt in excess, going over their capacity to repay what they are borrowing, again and again, Rating Agencies say - "this is triple AAA" !!!??? This example and the followings occurred during the past decade, but they haven't learned and it happened during the past 2 years after the pick of the financial crises, and also, it can be seen even in the past 2 months.
When a country accumulates high budget deficits in the last decade, and keeps on doing it every month, and these conditions occur at the same time with an average real growth rate around 1% or less, Rating Agencies say - "this is triple AAA" !!!??? (several examples during 2002-2012)
When, a country recognizes a problem and starts doing something to become solvent, Rating Agencies say this is not Ba or BB, or at least Caa1 or CCC, no, they say "This should be considered as Ca or C (Garbage or Junk)" (!!!???)
When a country which has been downgraded by a Rating agency, start's to correct his budget and trade deficits, finally goes to the market and issue sovereign debt with lower borrowing costs, I say in some hard working cases, this is at least Ba3 or BB-, with a positive outlook. Rating agencies don't agree !?!?!? (many examples during the last year).
The current ratings concerning most countries and public debt are useless. Always arrive late, don't solve nothing, don't help countries to identify their real problems and usually are (the ratings) the source of more problems than the ones that they were supposed to solve.
Perhaps we should save the money that we are paying to rating agencies. It should be put into better use, helping to keep our own budgets under control. This way we will be able to cut expenses without condemning growth. ;)
They (rating agencies) have a chance to reform and transform the work that they have done over the last years, and start doing it in the right way, as it should be!
I say, back to the "OLD...", nowadays, good looking and new...hard working analyses and the specifics about the real economy!" The old teachings are alive again...
That's why:
Photograph by Vincent J. Musi, National Geographic (Herding Family, Turkey)
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