Europe now snivelling before the rating agencies

The rating agencies Standard & Poor's, Moody's and Finch are all threatening to rate Greece as having defaulted if the next installment of the European rescue plan goes through: Debt Renewal May Trigger Default: Rating Agency Issues Greek Rescue Plan Warning Spiegel International 07/04/2011.

After their spectacularly sorry record in the lead-up to the financial crisis of 2008, it's a matter of no small wonderment that anyone gives the slightest attention to what the ratings agencies say.

But the pooh-bahs of the European Troika (EU Commission, IMF, European Central Bank) apparently do. I agree with the scornful tone Cerstin Gammelin uses in Die Panik vor dem Fallbeil Süddeutsche Zeitung 04.07.2011. It's a pitiful sight to see the countries of the EU sitting around trembling about what the rating agencies might say. Aside from having rotten records, they are not disinterested parties. The EU should tell the rating agencies to go blow and adopt a realistic solution that addresses the real problem, which is that Greece has a level of debt it's never going to repay. Recognizing that and requiring creditors to take reasonable shares of the losses is what needs to be done.

The European Union is supposed to be a democratic institution. And they are going to let the likes of Standard and Poor's lead them around by the nose? Gammelin writes, "Das kleine Griechenland steht plötzlich da als Symbol für den Untergang der mächtigen EU. Das ist absurd." ("Little Greece suddenly stands there as the symbol for the demise of the might EU. That is absurd.")

It really is absurd. Europe and the Troika need to start dealing with reality, and fast. The proper response to the rating agencies on this would be, "bite me." Or the German, "Lech mich doch." Either works.

Tags: eu, european union, greece

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