Why are we still listening to these people:
Ireland’s decision to accept a rescue package worth more than $100 billion prompted a call Monday for early elections and a warning from a major ratings agency that the bailout could prove to be a “credit negative” for the country.
European Union officials, who had been pushing Ireland to accept help, quickly agreed to the request late Sunday, committing a significant amount of money to an ailing member for the second time in six months. The total amount was not announced, but several officials said it would be 80 billion to 90 billion euros, or $109 billion to $123 billion. Last spring, Europe disbursed 110 billion euros to Greece to save it from default.
The move, which will allow Ireland to shore up its faltering banks and operate without having to borrow money at budget-breaking rates, was welcomed by Ireland’s neighbors on Monday, although financial markets were more cautious. There were also rising worries about political stability in Ireland as a result of the bailout and the angry public backlash it engendered.
Have the credit ratings agencies, the folks who are as complicit in the meltdown of the past few years as ANYONE, had to pay any price for their recklessness and malfeasance? Why are they still allowed to issue decrees, and why does anyone pay any attention to them. They spent the last decade slapping triple A on anything that gave them a bonues. They are hacks, pure and simple.
I hear “Moodys” and I think their word is only slightly more reliable than the 60 year old gin drunk chain smoking menthols at an airport bar.
WyldPirate
Cole sez:
What do you expect when the people that are paying the “ratings agencies” are the very people profiting from the BS that is being rated?
This is what laissez-faire capitalism devolves into over time–enough people figure out that they can make even more money in a game rigged in their favor if they just resort to outright criminality.
Linda Featheringill
I know that guy!
But the ratings agencies are a mystery at best. I hve long suspected that they engage not in offering reality but in disseminating propaganda. They are not to be believed.
Carnacki
That is an insult to gin drunks!
General Stuck
On more example of Obama had a chance to save the planet, and wimped out.
PeakVT
A brief review of the media indicates the agencies were able to purchase enough Senatorial services to limit the amount of reform in the Financial Services bill. Surprise, surprise.
PurpleGirl
They are hacks, pure and simple.
No, they are con men and thieves. They haven’t paid anything for their role in the economic meltdowns that I can tell, and if there were “invisible hands” guiding the market, they should be losing business or be closed down for fraud.
Dennis SGMM
The word “cautious” should never, after 2008, be used in the same sentence as the words “financial markets.”
As for the oft repeated phrases “The markets won’t like that,” or “The markets would like to see…” the DJIA stands at 11,166.73 right now and look at all of the jobs that are being created. Somewhere.
Erik Vanderhoff
I thought the glibertarians used to hold up Ireland as the example of what a growing, sensible economy should be. That worked out so well, didn’t it.
BR
@Dennis SGMM:
Yeah, I’m wondering when the media / Washington will realize that the middle class and the stock market decoupled a couple of decades ago.
numbskull
@WyldPirate:
Agreed, but also, Fixed.
Kryptik
Because they’re not sociamalists, duh. That explicitly means that they’re very serious people and worth listening to as far as money goes, even if that money disappears under their advice.
Don’t you get it John? Better to listen to a thief, a liar, and/or an incompetent then EVER, EVER, EVER risk even being perceived to listen to a liberal, progressive, and/or sociamalist. That’s the way you become a Serious Person.
Ash Can
I saw that Moody’s headline this morning on Bloomberg TV, and my first thought was, “who gives a crap?” I honestly have no idea why anyone listens to any of the ratings agencies anymore. My only guess is that they’re the only game in town as far as any kind of comprehensive ratings services go, and money managers have deluded themselves into believing that they’re not all that bad, they’ve fixed their problems, or whatever. My opinion is that it’s not terribly prudent, conservative (old-school definition), or intelligent on the part of the managers not to kick these fuckers to the curb.
Morbo
Well, if you pay the gin drunk a few grand, he’ll probably tell you what you want to hear, too.
Dennis SGMM
@Erik Vanderhoff:
The Celtic Tiger is now on the back porch meowing for a hand out. Glibertarians will attribute its decline to a failure to repeal labor laws and excessive corporate taxation.
AB
I see Ireland come up every time a blog with comments posts anything about stimulus spending as the inevitable wingnut example of the correct way to handle the current mess. I actually saw someone post something like “Bet on it, Ireland recovers first and best” as recently as early last week, probably over at Matt Yglesias’s blog where he seems to attract a lot of these people. I guess if your endgame is “bankrupt dystopia” things were looking pretty good for a while!
Bullsmith
They’re not really bailing out “Ireland” they’re bailing out the goddamn banks that ran huge ponzi schemes, paid their executives hundreds of millions if not billions, and then blew up.
No perp walks, no massive seizure of ill-gotten gains = a 100% guarantee the crime-wave isn’t over.
beltane
The more I read about what’s happening in Ireland, the more I am convinced that a total collapse of our financial system really is just around the corner. It feels similar to the buildup of WWI, except in an economic and not military sense. The foundations of our financial system are so thoroughly rotted that they won’t be able to hold up much longer.
This doesn’t mean we’re all going to die or anything, just that things will be unrecognizable 10 years from now. History happens.
WyldPirate
@Erik Vanderhoff:
This and how great the low corporate tax rate was and how the lack of “low corporate taxes” was killing the competitiveness of US businesses.
We’ll just forget about the part that the US tax code is so riven with loopholes that most US corps pay less than 12% as it is.
arguingwithsignposts
IIRC, there was some proposal in the financial reform bill that would require a different funding mechanism for the ratings agencies, and blind assignment of ratings or something. Did that ever work out?
And I always find it laughable (in an “I wish someone would punch these people in the junk” kind of way) that these POS’s hide behind the First Amendment when they get their asses sued for their crap ratings.
Quite a racket they have going.
geg6
@Erik Vanderhoff:
Celtic Tiger, dude, Celtic Tiger!
All the libertarians I know would crow about the Celtic Tiger. Wonder how they feel about riding that tiger now, eh?
And once again, all the libertarians I know look like the gigantic, fantasizing douches that they are.
lovable liberal
As they did with accounting firms, financial institutions got what they wanted – enough deregulation that they could buy the bullshit they wanted from ratings firms.
It’s an Ayn Rand paradise. Everything’s for sale.
And the pressure of the stock market to match operating margins or else get the CEO fired without collecting any bonuses makes sure that no publicly traded company will stand against the tide of opportunism by taking a conservative view of the next great “innovative” con game.
arguingwithsignposts
@geg6:
Seeing as how no facts seem to penetrate libertarian brains, I’m guessing those cheetos in mom’s basement still taste quite good.
Michael
I’m consistently amused at the notion that Greece, Portugal and Ireland have intact infrastructures, still-educated workforces, tourists industry bases that have never diminished and functioning governments, yet are incredibly hobbled because ratings agencies decided to up the price that they pay for their float.
All this without any of those national governments defaulting on any obligations whatsoever.
With the stroke of a few keys, the ratings agencies destroyed the economies of several nations because the MOUs wanted to get even more money.
arguingwithsignposts
@Michael:
And they’re doing the same to American cities and states, fwiw. Chicago was just downgraded, for instance.
James Gary
FYI: That “someone” was Morgan Warstler. Those familiar with the comment section of Yglesias’ blog know that no more need be said.
Steeplejack
John Banfield had an op-ed piece in the Times on Friday. It wasn’t particularly informative, because he went all novelist-y and metaphorical, but this leaped out: “It is estimated that the banking debt of this nation [Ireland], which has a population of only 4.6 million, may be substantially more than 100 billion euros.” That is almost €22,000 ($30,000) per person for every man, woman and child in the country.
My question is: what was produced—or even promised—that could amount to so much? That’s partly a rhetorical question, because it seems clear that a lot of it is the result of the same kind of financial fiddling we had here in the States. But, given the fiddle factor, why the straight-faced demands/assumptions now that the debt must be repaid exactly as toted up. “Contracts are sacred,” “preserve the integrity of the system,” etc., etc. But it seems clear that the integrity of the system was long since gutted. It was like a game of musical chairs where the fix was in on chairs for the bankers and none for anyone else.
I’m struggling to find my point here. Maybe I don’t understand the specific meaning of “bank debt” in this context. But it seems like a once-in-a-generation crisis event should call for, or allow, some equally rare remedy. Something other than just “Suck it up and pay it off.”
The Bearded Blogger
The Neoliberal Three Step:
1) Adopt Neoliberal policies, experience an economic boom for five years or so. Boom is seen as vindication of neoliberalism.
2) Economic bubble bursts, depression/recession folows. Because of the amount of money involved, this has international repercussions. Bust is not seen as refudiation of neoliberalism, but rather as an unfortunate accident.
3) Crisis leads to rescue; banks, investment firms and assorted plutcacry get rescued bu the underclass. Neoliberalism works!
This particular dance can be performed equally well by any nationality, be they Argentinians, Japanese, Irish or American.
The Bearded Blogger
@PurpleGirl: I think we are being ass-fisted by the invisible hand
Dennis SGMM
@Steeplejack:
Correct me if I’m wrong. I believe that the U.S. set the precedent for this by insisting that all of the CDO’s and the other byzantine financial instruments be paid off at one hundred cents on the dollar. The notion that any of the parties involved should take a haircut was dismissed almost immediately.
The Bearded Blogger
@Erik Vanderhoff: See my comment at 27. Billo said he was gonna move to Ireland. I think he’d scare the leprechauns
Culture of Truth
a warning from a major ratings agency that the bailout could prove to be a “credit negative” for the country.
it’s a little fucking late for that, n’est pas?
The Bearded Blogger
@beltane: Bernard Lietaer has thought of a future for money that I am very hopeful of:
http://en.wikipedia.org/wiki/Bernard_Lietaer
PanAmerican
@Michael:
That’s some catch, that Catch-22…
PanAmerican
@Michael:
That’s some catch, that Catch-22…
The Grand Panjandrum
So our choices these days are 1) a hand job by a TSA flunkie, or 2) a fisting by the invisible hand? Decisions, decisions. (Or maybe we could enjoy both. Simultaneously!)
EL
Another good question: why is anyone still listening to the rightwing idiots who held up Ireland as a great example of policies the US ought to adopt?
Such as
John McCain
Or this idiot who thinks we only need to adopt Ireland’s policies.
The Bearded Blogger
@The Grand Panjandrum: Also, a golden shower from trickle down economics, while watching the Washington circle-jerk
JohnR
Heard NPR this a.m. talking about how the lenders are giving tons of money to Ireland, but worrying about what country will be next. My first thought was “wow – lenders worried that they might have to rake in big bucks by lending to desperate countries!” My second thought was “Thank goodness we have NPR to report the news in a thoughtful and clear manner!”
I get so depressed; most of the time, even if I make an effort to write calmly and dispassionately I get a form letter back (if anything), and most of the time if I do get a real response it’s along the lines of “there, there, don’t worry your pretty head about these complicated issues”. Karma is a bitch when you’ve been a MCP all your life, I guess.
Citizen_X
It’s worth re-visiting Joseph Stiglitz’ account of “market liberalization” policies at the World Bank, and the predictable upheaval (with lots of juicy profiteering opportunities for the banks!) that results.
The IMF riot: it’s not just for developing countries anymore.
BR
BTW, I’m not sure if you all heard, but US corporations are lobbying Ireland to ensure that while Irish citizens get their services cut and taxes raised, US corporations that use Ireland to funnel money to avoid US taxes will be unaffected:
http://www.telegraph.co.uk/finance/financetopics/financialcrisis/8148882/US-firms-warn-Irish-over-tax-move.html
jon
Next time Ireland needs some money, they can put Ulster up as collateral.
The banks will still lend it.
Corner Stone
@Citizen_X:
I think they’ve stolen about all they could from the 3rd world economies.
Now they have to start doing a bust-out on the weaker sisters of the Western 1st worlders.
Ann Rynd
what’s wrong with bankers trying to realize their potential? They’re people too! They have human needs. Ya’ll are just trying to quash their best efforts to acquire self esteem.
Erik Vanderhoff
@James Gary: I’ve never before or since so desired that internet pseudonyms come with a face, so I could punch it.
Linda Featheringill
@Corner Stone:
IMF
The 3rd world countries don’t have actual money left to steal.
Judas Escargot
@beltane:
The more I read about what’s happening in Ireland, the more I am convinced that a total collapse of our financial system really is just around the corner. It feels similar to the buildup of WWI, except in an economic and not military sense.
It’s really starting to seem as though this global financial crisis is a multi-front global “war” of sorts: The global banking system versus the various liberal/democratic governments across the globe. One by one, governments that ostensibly answer to their people are being bankrupted– and then those very same people are lovingly informed that there must be ‘sacrifices’ in the name of ‘fiscal responsibility’.
And it really does seem to be the democracies that are being picked on: Greece, Ireland, Spain have the possibility of (but no real evidence for) future inflation? No low interest rates for you folks. But China at 25% domestic inflation in some sectors due to currency manipulation? No problem!
The foundations of our financial system are so thoroughly rotted that they won’t be able to hold up much longer.
The only consolation I find these days is that it is impossible for the banks to ‘win’, long term: The world they are trying to shape is rationally unsustainable, and objective reality will eventually catch up to them– but at what cost to the rest of us?
PurpleGirl
@Steeplejack: The only contracts that MUST be honored now are the ones that give profits to banksters and the FIRE sector. Does not matter how those contracts were developed or why but they are sacred and must not be compromised.
PurpleGirl
@Culture of Truth: Since the Irish problems began, the government went the austerity route and tried to do what the “markets” said they must. And the markets responded by raising interest rates and demanding more austerity and threatening that if the government didn’t do so, there would be credit negative results. It’s blackmail.
patrick II
I saw Charles Ferguson’s “Inside Job”, a documentary about the global financial meltdown, last night. It was as good a documentary about a complex subject as anything I have ever seen. There should be a lot of people going to jail right now, but unfortunately most of the people who should be sending them to jail should also be going to jail.
Bottom line for me is that once power accumulates in one nexus, and is able to control the government, there is no easy way out.
Another bottom line is to reinforce something that caught me by surprise years ago. When I was young I thought smart people would solve problems more objectively and rationally. What I have learned since is that many smart people are simply better at rationalizing their own irrational greed and bad behavior. To watch some of these interviewees as they are confronted with the facts of their perfidy would be sad if there was any room for compassion. They lie, they hesitate, they stutter as they desperately try rationalize their actions.
It is a movie that should be seen by anyone who wants some insight into the financial morass and the people who are still making it.
Gus
@PanAmerican: It’s the best there is.
burnspbesq
@BR:
Actually, they didn’t. Got a 401(k)? If yes, what’s in it?
burnspbesq
@The Grand Panjandrum:
Think of it as a prostate exam. The public option at last!
burnspbesq
@BR:
Bad, tone-deaf PR. It was unnecessary for US multinationals to say anything. There is already a rock-solid consensus across the entire spectrum of Irish political opinion that the 12.5 percent rate must be maintained.
trollhattan
Here’s what our Galtian Overlord Banksters will be
hydrating themselves withbathing in.http://www.latimes.com/news/nationworld/nation/la-na-iceberg-water-20101121,0,7134330.story
Certainly, it presents a reasonable alternative to orphans’ tears.
jl
“the 60 year old gin drunk chain smoking menthols at an airport bar”
You mean Boehner? Is he reliable? I guess for some things he is, but you probably mean for something productive.
Quicksand
You know what else might be “credit negative?” Default, perhaps?
El Cid
This is relevant.
Chapter 7 for nations?
El Cid
When it finally makes it through moderation, can anyone explain why my comment quoting the NYT, with only one link, got moderated? It didn’t use the “soshullist” word.
JohnR
@Quicksand:
There’s insurance for that – try AIG.
JenJen
Speaking of economic crooks and liars, Matt Taibbi was really onto something the other day when he wrote on the rumors that Goldman Sachs, et al, were about to be snagged by an insider-trading probe:
And just today?
FBI Raids Three Hedge Funds Amid Insider-Trading Case
Two of the hedge-fund firms raided this morning are managed by former managers of SAC Capital Advisors, one of the firms who received John Kinnucan’s email, per Taibbi’s piece.
Calouste
The Irish government said they would back the banks no matter what in 2008. That’s like giving you alcohol friends the keys to your liquor cabinet “to have a drink”. Don’t be surprised if the bottles are empty and the place a mess when you get back.
Seems like the Irish government will fall and there will be early elections, in which Fianna Fail, the main coalition party will probably not do very well.
Another thing mentioned in the Guardian is that the total cost might go to 207 billion euros, or a mere 180,000 euro per Irish family of 4.
As mentioned above, the banks have indeed slurped the country dry and are now looking for the next victim. They should just go in default.
Brachiator
@Dennis SGMM:
I don’t think that the U.S. has much set the precedent here. Various countries have approached dealing with the financial crises in their own ways. The European community, led by Germany sometimes, has specifically rejected much of the US approach.
Ireland’s response has been conditioned by the fact that it must deal with the requirements of the European central banks, the bond markets, and by Ireland’s early decision to back bad banks.
By the way, there have been a number of useful podcasts covering Ireland’s financial problems on the BBC World News services and from the Economist (and NPR often carries some of the BBC broadcasts). Some of the podcasts on November 19, before Ireland formally accepted the bailout, have been very interesting.
Here’s a piece from an analysis in the current issue of The Economist
There are also good perspectives to be found at online edition The Irish Times and BBC News.