One thing is certain: the American rating agencies are not “neutral”. Their proposal is to change the economies of the debtor countries though privatizations, wage restraint and labor market deregulation.
The present predicament of the European economy, which is leading the entire continent on the road of economic depression, can be seen in a number of ways. Some European Countries are in debt to international – that is , basically American - finance, and the lenders require a steady increase of the rate of interest in order to compensate the probability of a debtor’s default .
However, pushing higher and higher the rate of interest makes sure that sooner or later the debtor countries will have to default , being unable to pay such an increasing rate of interest for their debt. Who runs this machine? The so called “rating agencies”. These are private institutions, who, in absolute autonomy, due to their nature of privileged representatives of the USA, decide how high the rate of interest has to be. These are the real controllers of the situation, and everybody else has to react to their decision without ever disagreeing with them.
For a moment, the European countries have been talking of creating an “ European Rating Agency”, but the project was soon abandoned , in fear of American retaliation, and also because an European rating company would not be “neutral” towards the debtor countries. It is not clear whether the “neutrality” would have gone in favour or against the debtor countries. However, one thing is certain : the American rating agencies are not “neutral”. This has been visible over and over again.
A great American Bank went bankrupt at the start of the big financial American crisis, and nobody had said a word. More recently, another big bank has incurred into losses of which it cannot even quote the size, and its “rating” did not change; actually everybody praised its boss, who cannot even give a number to its losses. Of course , the rating agencies have their own recipe on how the debtor countries must gather the money to pay their debts. and also how to improve its economic situation . The proposal is to change the economies of such countries : to privatize whatever economic activity is in the hands of the State, and to reduce not only the income of the working force, including the old component , but also its ability to defend their jobs .
The tax rate on low and average incomes should be increased, hitting the lower and the middle class, and leaving unscathed the higher incomes and of course , the patrimonies. All this will increase the income differential among the population, a very risky policy, and reduce the demand of the largest part of the population, which will eventually have a negative effect on production. So, the way to get out of such a predicament is to enter into an economic depression, and this is the present situation of Europe .
This recipe has been called the “Washington Consensus “ but it must be said that a large part of the American opinion does not share it . In fact , the Obama Government has repeatedly proposed to Europe a completely different solution , that is, to stimulate the economy, in order to sustain aggregate demand. However, these solicitations have ben ignored by the Europeans, who seem to have absorbed not what the American economist say , but rather what the financial environment is proposing. That is, that the rate of interest on debts is to be calculated and revised every now and then, by the lender himself