Bond rating agencies and the economics of ugly forebodings

Please chip in to support more articles like this. Support for as little as $5 per month!

Where do bond rating agencies get the nerve? They loom over economic policy like divine oracles. They tell lenders how safe to feel when making loans and therefore what interest rates to charge governments who borrow from them. In recent decades, as raising revenues through higher taxes became politically toxic, they expanded their influence and arrogance.

Before this week's Ontario budget, they'd already "downgraded" the province's "outlook" -- though not its rating -- from stable to negative. It really does sound like the Delphic oracle: murky but definitely gloomy. They're part of the economics of ugly forebodings that dominates our era.

Before the June election, columnist John Ivison wrote: "The credit-rating agencies will likely record their verdict on the election within 24 hours of the polls closing and we can expect to see the credit downgrades that would have come already. . . " The interim Tory leader keened: "It is immoral to give people false hope with a budget … only to have to take away services and programs when the lenders put a gun to your head…" They effectively tell governments how many people to fire and what to sell off to balance their books. Their sole criterion is the math. Human welfare, misery or planetary health never factor in.

Yet these agencies gave us (though not all by themselves) the crash of 2007-8. Many of the funds that bought those absurd "devices" which Warren Buffett said he wouldn't buy because he can't understand them -- Warren Buffett!-- are legally required to secure triple-A ratings for their purchases. The ratings agencies happily complied. Two years later those ratings had slid to junk level and three huge banks were kaput. They were indispensable in creating the housing bubble, bailouts, demands for austerity -- plus a living hell for U.S. homeowners and entire European nations.

They reformed mildly and briefly, like the banks, then reverted to their old ways. They underpay and understaff their workforce so as to increase executive pay; their best employees are routinely hired away by banks. You'd think their reputation might've taken a hit. Like Cassio, in Shakespeare's Othello, why aren't they moaning: "Reputation, reputation, reputation! Oh, I have lost my reputation! I have lost the immortal part of myself, and what remains is bestial." But they show no sign of self-doubt.

Alas (Cassio might add), they aren't alone. Reputation is the weirdest thing. How did Peter MacKay salvage his? In 2003, in order to become leader of the Progressive Conservatives, he promised not to merge his party with Stephen Harper's Canadian Alliance. Then he reneged, just like that. When his girlfriend, Belinda Stronach, deserted to the Liberals, he apparently referred to her in Parliament as a dog. Hansard didn't record it but it's indistinctly on tape and others heard it. Now he parades as the protector of female virtue against perverts and johns. I've never understood why Brian Mulroney didn't go into hiding after taking bags of cash from Karlheinz Schreiber. Or the U.S. officials who lied about Iraqi WMDs, resulting in the current chaos there -- and go on TV now to explain it's Barack Obama's fault. How can they all be so shameless, while innocent kids whose reputations were smeared on the Internet kill themselves from a sense of shame? It's grotesque and incommensurate. But I digress.

So to whose voice should we attend: Moody's and the other bond raters or Evo Morales? He's the president of Bolivia and he presided at a meeting last month of 104 nations that issued a declaration in favour of the economic concept, Vivir Bien -- living well. "It means listening to the people, rather than the financial markets," he explained. "It means placing Nature at the core of life and regarding the human being as just another creature of Nature."

I know that sounds syrupy and naive compared to what we're used to. But this week Manitoba experienced flooding that's become the frightening new normal, menacing farmers' livelihoods; fires are advancing on Yellowknife; in Oklahoma, earthquakes have increased more than 200-fold in a few years due to fracking. Who's really naive and who's economically credible at this juncture?

Or, as Shakespeare also wrote (approximately): "The first thing we do, let's kill most of the economists and all the bond raters."

This column was first published in the Toronto Star.

Photo: Adam_T4/flickr

Related Items

Thank you for reading this story…

More people are reading than ever and unlike many news organizations, we have never put up a paywall – at rabble we’ve always believed in making our reporting and analysis free to all, while striving to make it sustainable as well. Media isn’t free to produce. rabble’s total budget is likely less than what big corporate media spend on photocopying (we kid you not!) and we do not have any major foundation, sponsor or angel investor. Our main supporters are people and organizations -- like you. This is why we need your help. You are what keep us sustainable. has staked its existence on you. We live or die on community support -- your support! We get hundreds of thousands of visitors and we believe in them. We believe in you. We believe people will put in what they can for the greater good. We call that sustainable.

So what is the easy answer for us? Depend on a community of visitors who care passionately about media that amplifies the voices of people struggling for change and justice. It really is that simple. When the people who visit rabble care enough to contribute a bit then it works for everyone.

And so we’re asking you if you could make a donation, right now, to help us carry forward on our mission. Make a donation today.


We welcome your comments! embraces a pro-human rights, pro-feminist, anti-racist, queer-positive, anti-imperialist and pro-labour stance, and encourages discussions which develop progressive thought. Our full comment policy can be found here. Learn more about Disqus on and your privacy here. Please keep in mind:


  • Tell the truth and avoid rumours.
  • Add context and background.
  • Report typos and logical fallacies.
  • Be respectful.
  • Respect copyright - link to articles.
  • Stay focused. Bring in-depth commentary to our discussion forum, babble.


  • Use oppressive/offensive language.
  • Libel or defame.
  • Bully or troll.
  • Post spam.
  • Engage trolls. Flag suspect activity instead.