Giving credit where credit is due

Excellent to see Amartya Sen taking a pop at the rating agencies in today's Guardian. He argues that despite their abysmal track record on rating financial instruments, they are calling the shots over the fate of nations that is genuinely harmful for the future of democracy.

Sen points out that UK policy makers feel themselves beholden to the credit agencies and so have taken decisions on deficit reduction and austerity to placate them. But, he points out, at least in the UK we can debate the wisdom of the policy and the government can claim that part at least of its programme was put to the people in an election.

This is not the case in Greece. Economic policy and the fate of the government is in the hands of the IMF and credit ratings agencies, not the Greek people. Now we could say that the Greeks have had their chance and blown it. But if the generals return as a result of this crisis, part of the blame should be laid at the door of the international, unelected, undemocratic financial institutions.

It's really sad that Congress backed off from suing the ratings agencies over the collapse of Lehman's and the financial meltdown that occurred in its wake. After all, these organisations had given triple A ratings to all the dodgy financial instruments - including the bundles of sub-prime mortgages at the heart of the system's toxicity - being traded around the globe before the crash, instruments that had precipitated the mega-crisis in confidence that led to collapsing banks and bloating deficits across the western world.

I wonder where we'd end up if Greece called the credit ratings agencies' bluff, gave the IMF a couple of suggestions about what it could do with its austerity package and carried on as before. If nothing else it would wipe the Cheshire cat grins off the faces of the men in suits no one voted for. Maybe it would be the first step in a genuine reform of the world's financial system in favour of one that gave a damn about the people at the bottom of the pile.

At the end of  the day, Bruce Cockburn had the IMF well and truly summed up in his song Call it Democracy - you can check it out here and see what I mean...