The new rating is probably right. Maybe the timing looks suspicious, but the new rating would have come sooner or later.
There's a collusion of US Government and big corporations, but rating agencies have been pissing off Washington, so I don't think in this case there is collusion.
The S&P pissed off Washington with a downgrade (shortly after which they got charged with fraud and sued for $5 billion by the Feds), but I'm not aware that Moody's has done anything to really piss off Washington.
"The trouble for the firm started on July 16, 2011, when Egan-Jones downgraded the U.S.’s sovereign debt by one notch, to AA+ from AAA... Two days later, the SEC’s Office of Compliance Inspections and Examinations contacted the firm seeking information about its rating decision...
on Oct. 12, Egan-Jones received a call from the SEC notifying the firm of a Wells Notice, an indication that it was being investigated.
On April 5 of this year, Egan-Jones again downgraded the U.S. sovereign debt, to AA from AA+. On April 19, leaks started emanating from the SEC that it had voted to start an “administrative law proceeding” against the firm. And on April 24, the SEC filed its complaint."
Exactly what I was thinking. Moodys is headquartered in the World Trade Center and is about as establishment socio-political-economic world order as you can poke a stick at.
As China’s credit crunch takes a turn for the worse, the question of why the central bank has permitted market conditions to deteriorate so suddenly and so sharply looms ever larger.
[ Details on the credit crunch and possible causes. ]
But in the midst of the extreme market stress, a statement issued late Wednesday by the central bank raised the possibility that politics are also playing an important role.
[...] the People’s Bank of China ordered a thorough implementation of the new “mass line education” campaign launched this week by President Xi Jinping – a campaign that in its propaganda-style and potential scope carries echoes of the Mao era.
The Communist party cadres that run the central bank were told to attack the "four winds" of “formalism, bureaucracy, hedonism and extravagance”, as demanded by Mr Xi...."
It appears the purge of Bo Xilai and company did not signal this sort of thing would stay in the past.
"The Mass Line (from the Chinese qunzhong luxian) is the political, organizational and leadership method developed by Mao Zedong and the Chinese Communist Party (CCP) during the Chinese revolution. As described in a Revolutionary Communist Party USA pamphlet, it is the "concentrate[d] .. correct ideas that the masses gain in everyday life", as gathered and published by the party. Mao developed it into a coherent organizing methodology that encompasses philosophy, strategy, tactics, leadership and organizational theory that has been applied by many Communists subsequent to the Chinese revolution. Chinese communist leaders generally attribute their conquest of power to the faithful pursuit of effective "mass line" tactics, and a "correct" mass line is supposed to be the essential prerequisite for the full consolidation of power.
According to Frederick Teiwes, Emeritus Professor at the University of Sydney, the "mass line" was related to the CCP's mass organizations. "Fundamentally, for all the CCP rhetoric concerning the 'mass line,' the unions and other mass organizations functioned more as Stalinist "transmission belts" in laying down the party line and extending the reach of the state," he wrote."
The four winds is being invoked because China allowed their economy to get too juiced on leverage, and imbalanced from uneven stimulus measures. It's little more than a useful prop for the party to try to squeeze froth out of the system before it ends in an even worse crash.
Errr, as I may have made clearer in a closing sentence I added after you posted your reply, I'm focusing on the style of this; that the bubble needs to be popped is not something I question.
Hmmm, thinking about it, if the new leadership has a clue, they are recognizing that the inevitable crash is going to be very painful, so I wonder if they aren't also planning on a return to old style repression to manage the social fallout. I may indeed be reading too much into the campaign and slogan (I don't follow the PRC all that closely), I guess we'll find out soon enough.
Didn't Moody's actually upgrade Ecuador's sovereign debt rating shortly after they offered Assange asylum?
I don't have the highest regard for the independence or accuracy of the ratings agencies, but I somehow doubt they care particularly either way about whether a nation's policies on extradition suit US interests. And placing the burden of providing evidence on someone arguing against tinfoilhattery is just silly.
I agree this downgrade is likely coincidental with Snowden's HK departure
However, consider that Assange is neutralized as long as he's trapped in the Ecuadoran embassy, whereas Snowden is "at large". Slight difference there.
17 comments
[ 132 ms ] story [ 203 ms ] threadThe new rating is probably right. Maybe the timing looks suspicious, but the new rating would have come sooner or later.
There's a collusion of US Government and big corporations, but rating agencies have been pissing off Washington, so I don't think in this case there is collusion.
"The trouble for the firm started on July 16, 2011, when Egan-Jones downgraded the U.S.’s sovereign debt by one notch, to AA+ from AAA... Two days later, the SEC’s Office of Compliance Inspections and Examinations contacted the firm seeking information about its rating decision...
on Oct. 12, Egan-Jones received a call from the SEC notifying the firm of a Wells Notice, an indication that it was being investigated.
On April 5 of this year, Egan-Jones again downgraded the U.S. sovereign debt, to AA from AA+. On April 19, leaks started emanating from the SEC that it had voted to start an “administrative law proceeding” against the firm. And on April 24, the SEC filed its complaint."
http://www.bloomberg.com/news/2012-09-30/sec-sues-the-one-ra...
"Echoes of Mao in China cash crunch
By Simon Rabinovitch in Shanghai
©AFP
As China’s credit crunch takes a turn for the worse, the question of why the central bank has permitted market conditions to deteriorate so suddenly and so sharply looms ever larger.
[ Details on the credit crunch and possible causes. ]
But in the midst of the extreme market stress, a statement issued late Wednesday by the central bank raised the possibility that politics are also playing an important role.
[...] the People’s Bank of China ordered a thorough implementation of the new “mass line education” campaign launched this week by President Xi Jinping – a campaign that in its propaganda-style and potential scope carries echoes of the Mao era.
The Communist party cadres that run the central bank were told to attack the "four winds" of “formalism, bureaucracy, hedonism and extravagance”, as demanded by Mr Xi...."
It appears the purge of Bo Xilai and company did not signal this sort of thing would stay in the past.
ADDED: Mass Line according to Wikipedia (http://en.wikipedia.org/wiki/Mass_line):
"The Mass Line (from the Chinese qunzhong luxian) is the political, organizational and leadership method developed by Mao Zedong and the Chinese Communist Party (CCP) during the Chinese revolution. As described in a Revolutionary Communist Party USA pamphlet, it is the "concentrate[d] .. correct ideas that the masses gain in everyday life", as gathered and published by the party. Mao developed it into a coherent organizing methodology that encompasses philosophy, strategy, tactics, leadership and organizational theory that has been applied by many Communists subsequent to the Chinese revolution. Chinese communist leaders generally attribute their conquest of power to the faithful pursuit of effective "mass line" tactics, and a "correct" mass line is supposed to be the essential prerequisite for the full consolidation of power.
According to Frederick Teiwes, Emeritus Professor at the University of Sydney, the "mass line" was related to the CCP's mass organizations. "Fundamentally, for all the CCP rhetoric concerning the 'mass line,' the unions and other mass organizations functioned more as Stalinist "transmission belts" in laying down the party line and extending the reach of the state," he wrote."
New leaders, new party line ... we'll see.
Hmmm, thinking about it, if the new leadership has a clue, they are recognizing that the inevitable crash is going to be very painful, so I wonder if they aren't also planning on a return to old style repression to manage the social fallout. I may indeed be reading too much into the campaign and slogan (I don't follow the PRC all that closely), I guess we'll find out soon enough.
I don't have the highest regard for the independence or accuracy of the ratings agencies, but I somehow doubt they care particularly either way about whether a nation's policies on extradition suit US interests. And placing the burden of providing evidence on someone arguing against tinfoilhattery is just silly.
However, consider that Assange is neutralized as long as he's trapped in the Ecuadoran embassy, whereas Snowden is "at large". Slight difference there.