Who is this S & P that can plunge nations into darkness by changing ratings ?

Its a wonder to me that a privately owned financial organization called S & P could alter the way the world looks at economics,  and pressurize governments of ( say the Eurozone) to take steps that could destroy their social systems and radically alter the lives, security and future of millions of people.  Why would a downgrade by S & P radically alter currency values (especially the Euro).  What do they know that others do not ?  What do they know that the governments of the nations do not ?

After all in 2008 it was radically clear that no one knew. Almost everyone that understood capitalism in one way got it completely wrong. Capitalism turned tables on all known financial systems and showed that there is a time when the rules suddenly change, where the bubble suddenly burst and the flaws come bursting out.

There was a time when the World Bank policies were pushing developing nations to make decisions that in theory and paper looked great, but which from a huge social cost perspective were a disaster.  Especially large infrastructure projects that not only caused huge human displacement, social injustice and trauma, police atrocities, and environmental damage. And in a cost/benefit analysis 10 years down the line, the only benefit turned out to be was to the corporations, politicians and middle men.  Not the people.

Thankfully the World Bank does not wield that power (at least in India) or Indian financial systems would have been far more hit by the sub-prime crisis than it was in 2008. Not a deliberate path of ‘overlordship’ by the World Bank I think, but the Western Economic System was the only one that was considered valid then. It was the economic mantra taht failed. Post 2008 has been a lesson – the one which we are in danger loosing sight of again. A lesson that cultures often come into conflict with economic development models understood in , and imposed by other cultures .

Back to Europe, then.  I wanted to know who owns S &P. Is it men in pin stripe suits in darkened board room ? Like the proverbial Gnomes of Zurich ? Here’s what I discovered :

http://tinyurl.com/7jyxznw

S &P is owned by a series of banks and financial institutions that stand to profit by hugely by the movement of currencies, bond markets and financial markets if they has prior knowledge of downgrades from the very company they own.  And for those that wonder if it such large multi nation manipulations can at all take place should remember the Asian currency crisis of 1978 where “market overreaction and herding caused the plunge of exchange rates, asset prices, and economic activity to be more severe than warranted by the initial weak economic conditions”.  The crisis destroyed millions of livelihoods all across Asia, and some economies have still not recovered.  From market speculation.

Is S & P completely above board ?

The good thing though is that the latest downgrade of European nation did not cause the market chaos that was expected. Speculators must have lost a lot of money. Thank God. And perhaps S & P has now ‘cried wolf’ too often and no body really cares

Or maybe, like everyone else, they just don’t know.

15 Responses to “Who is this S & P that can plunge nations into darkness by changing ratings ?”

  1. Adv Desi says:

    I thought you know better then this – because of the downgrade now the bonds from the Government will fetch low rates. Bond rates are directly(mostly) tied to the ratings. for example if 2 Govt issue a bond with 5% return, one has AAA rating other has AA. As an investor which one you going to buy? Small investor can’t do more research then the agency and hence rely mainly on these ratings. Let me know if you need more elaborate examples.

  2. Rudra says:

    Hi Shekhar, Your blog is on the money this time !! ( pun intended).

    I see the signs of waking up , in your blog . I wish more people wake up and realize that there is an Invisible Government that pulls strings of all world governments, this day.

    Your statement – “Thankfully the World Bank does not wield that power (at least in India) or Indian financial systems would have been far more hit by the sub-prime crisis than it was in 2008.” Sorry to say , Shekhar , but the Bad news is Worse than you imagine !

    WOrld Bank nominated Man Mohan Singh , as the FInance Minister in PVN Rao government in 1991. It was Subramanian Swamy , who actually proposed and made possible the economic reforms. Man Mohan Singh , only carried them forward. M M singh never won a single Election.

    india’s first and longest serving UN ELECTED ( nominated from Rajya Sabha) Prime Minister , is an ex -World Bank employee. Not too dissimilar to Mr. Mario Monti of Italy. First they has a Crass Laloo Yadav type politician ( Berlusconi ) misrule and brought the country to ruin , then we have ‘ Professionals’ taking over the government. Same thing in Greece.

    In India it is worse. International Cartels/ Vatican/Foriegn intelligence Agencies have the Government in their grip. Indians are asleep.

    American mathematician Sam Saunders has a lovely analogy about how certain truths creep up on us. A frog placed in hot water will struggle to escape, he points out, but the same frog placed in cold water that is slowly warmed up will sit peacefully until it is cooked.

  3. shekhar says:

    ‘American mathematician Sam Saunders has a lovely analogy about how certain truths creep up on us. A frog placed in hot water will struggle to escape, he points out, but the same frog placed in cold water that is slowly warmed up will sit peacefully until it is cooked ‘ , so true

  4. Rudra says:

    Shekhar,

    All across the world , more acutely in india , Democracy and its institutions have been heavily subverted from within. There are institutions with all the ‘Trappings of Power’ , but with no Real Power.

    Take Man Mohan Singh – the fellow cannot talk , when he tunr to talk he has to move his whole frame , cannot understand what is said to him , never gives Interviews or leads public debates. Has the press and other Puppet World leaders praising him , and thereby giving him a halo of Legitimacy.

    His is the most dangerous liability of india at this moment. While he is an effective cover-up , the real power is wielded by extra constitutional authorities and international banking cartels.

    Indian democracy and India are in grave danger , in many ways. In America and in Brussels , the new Devil’s Home , there is talk of a ‘Post Democratic World Order’. Banking Cartels have a huge role to play.

    It is not just Human Greed. It is strategic and Engineered Chaos , Engineered Human Misery on a scale all tyrants of the world will be proud of. Boom and Bust cycles rip off money from the developing world into the Markets , and then from the Markets into the Banks.

    We should all be thinking of this Wierd concept of ‘DEBT’. And why Governments have to ‘ Borrow’ money from the Private Banks ( who pass off as Central Banks or Investment Banks ) to create money in the economy.

    With no Gold backing of world currencies , most notably the US Dollar , currently the world reserve currency , all they do is print for fun – also called QE 1-4. Paper money resulting from the Fractional Banking system ( Including in India ) , is worthless.

    Dengerously , in India , De LA Rue the ITALIAN company has been awarded all the rights to print Indian Currency ! This is strange as no other country shares its currecy designs to Foriegn companies. By the way , the same company also prints – Pakistani currency !

    There are rumours that the source of Conterfiet curency is right within RBI !! o wonder the new counterfeits are proving hard to tell from the original !! Who gave permission for this ? The Indian Finance Minister at the time – Chidambaram.

    Traditionally , World Bank has been under the control of USA. While IMF under European Control. Regulators are owned by or work in tandem with the Investment Banks they are supposed to Audit. And All of them are in complete control of many world Governments – USA being no exception.

    They cause wars , they fund both sides of the conflict – why ? Because nothing creates DEBT like a WAR. So , what I’d say is , expect more spectacular Wars in the comming Recession of 2012. Wars imply Weapons Deals – with Armament companies funded by the same Banks !

    Welcome to the Post-Democratic World, or , as Fareed Zakaria would like us have it – the Post American world., where the Nation-State is transcended by Regional Unions controlled by the Banks.

  5. AJ says:

    To continue on Sam Saunders …

    Certain truths/lies are manufactured to keep people in disguise …

    A lot happens behind scenes and shall not be told .

  6. Mohan says:

    Adv Desi,

    You have got it wrong. When the rating goes of any country the PRICE of the bonds will go down,
    however the interest rate on the bonds will go up.

  7. Mohan says:

    Please read as when the rating goes DOWN of any country

  8. Priya says:

    what rudra has written is shocking.

    is it all really true !? Godddd ! we must all thank people like rudra for somehow digging up these facts the mainstream media never ever reports. thanks rudra for sharing all this. my heart sinks but what is the solution ??

  9. Siddharth says:

    That S&P is just as clueless (maybe more) as any other Joe was made amply clear in 2008. Their recent downgrade of US debt this past summer had zero effect on yields of Treasury bonds. Their credibility isn’t all that great any more.

    They are perhaps the one-eyed in the world of the blind, which is why some investors (and the media) listen to what they have to say.

    Your points about the prescriptions of the World Bank and IMF are also valid. I don’t know if it’s out of malice or stupidity but they are often wrong. This HBR article is a wonderful analysis of how Malaysia went against the conventional wisdom of the IMF and did what they thought was right, thereby saving themselves from a terrible crisis in the late 1990s. http://blogs.hbr.org/hbr/meyer-kirby/2011/08/idle-funds-are-the-devils-play.html

  10. Mohan says:

    Rudra,

    Del La Rue plc is not an Italian company, it is British. They not only
    print Indain and Pakistani currencies they also print currencies of other
    countries also. Some of them are Singapore, Kuwait, Kenya and European Central
    Bank. They also print passports for various countries.

  11. Sanjiv Sharma says:

    Hi Shekhar,
    Sanju (Asha Masi) here.
    S&P is owned by McGraw-Hill which is a publicly traded company.
    The truth is that they don’t know/understand about soverign debt; see 2) below.
    Their business model is suspect since the banks/underwriters directly pay them to rate coporate and mortgage debt.

    If you are interested, do read the following:

    1) A very readable account (pgs 1-68) of common (and dangerous) misconceptions about the economy is available at http://moslereconomics.com/wp-content/powerpoints/7DIF.pdf

    2) http://www.epicoalition.org/docs/flawed_logic.htm to understand flawed logic of the ratings agencies (written in 2002)

    3) http://www.epicoalition.org/docs/rites_of_passage.htm which predicted this liquidity crisis for the Euro in 2001!

    Cheers….

  12. shekhar says:

    thanks Sanju

  13. Rudra says:

    @Mohan,
    You seem to be content about it being a UK company. Does that give you a warm feelings of Comfort, now that the indian monetary jugular is with your great Aunty Britain? There are many indians who felt lost when their white masters left, so much so they have now selected a white barmaid turned oligarch into the queen of india .

    the contract for printing with de la rue was taken by chidambaram., under instigation of you-know-who

  14. Harb says:

    Here is an other example of Indian money being looted by the foreign cartels in connivance with Indians in various govt/semi-govt organisations.

    S&P changes ratings and Indian Stock Market NSE plunges to near 4500 around beginning of new year 2012. Then FII’s begin to buy and buy (7800 cr net in a month) . And as always DII sell and sell (5300 cr) (It is cash buying/selling, future separate.) When the market has reached 5100 yesterday RBI governor cuts CRR rate to further boost the market. Clearly FII’s knew about it before hand when they began to buy while either DII did not know or sold in connivance with govt officials and FIIs.

    So clearly there are FII cells in RBI/Govt and clearly DII/Govt officials are hands-in-glove with FIIs. Seems no need to deposit money in Swiss banks now, FIIs will take care of that.

  15. Chakra says:

    @ Priya ji:

    da solution is there in all the patriotic posts of Rudra ji and Brahmastra ji on SK.com!

    I urge u from the core of my heart to go thru each and every one of those awe-inspiring contributions and most importrantly to spread the holistic/divine message to your near & dear 🙂 🙂 🙂

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