The EU has unveiled yet another plan to rein in credit agencies’ unquestioned sway over the market in sovereign debt — their ability, in effect, to overthrow governments by downgrading their ratings. The Irish Independent paints a rosy picture of an attempt to restore “political sovereignty”:
The proposals, unveiled yesterday in Strasbourg by the EU‘s internal market chief Michel Barnier, are the third clampdown on agencies in as many years, and build on existing rules that force firms to register in the EU before they can operate here. Mr Barnier said ratings agencies had made “serious mistakes” in the past and that the spate of sovereign downgrades since the start of the Greek debt crisis last year had compounded market instability.
Eurozone nations including Ireland and Portugal have undergone repeated downgrades of their debt, even as bailout plans were being put in place, a fact that Mr Barnier said “surprised” him…
“We can’t let ratings increase market volatility further,” he said.
“We need to rebuild our political sovereignty so we’re not subject to the sovereignty of the markets.”
The Guardian is more skeptical about these fanfares of resistance. “Sounds rather like Europe’s efforts to clean up the murky world of credit rating agencies have been put firmly on the back burner,” they say. They quote one observer who notes that “the only major reform left” in Barnier’s quiver is the possibility that a future “error would be referred to the courts”:
[It] quickly becomes clear that Barnier has been forced to ‘postpone’ his proposal of a ‘blackout’ on cutting the credit rating of any country involved in “live negotiations” on a bailout. He’s now indicating he has been forced to give way elsewhere too… Barnier has also dropped the suggestion that larger agencies (those with more than 20% market share in EU) should be banned from taking over smaller ones.
Yes, so much for “political sovereignty.”
I was thinking of things like this the other night while watching the penultimate Harry Potter movie. I’ve never quite got what makes these extravaganzas so amazingly popular. The books are devoured and the movie tickets bought, after all, by Muggles. And even setting aside Voldemort’s Nazi ardor for a pure-blood wizard world and his call of “Wir müssen die Mugglen ausrotten,” the stories are not really very kind to the Muggles who consume them. Those artless dullards are plump, powerless, passive, and irrelevant, while Harry and the magic kids get all the fun. A child or a parent reading them might feel palpably and permanently inferior to these superbly wand-endowed masters of the universe.
Yet that’s the point, isn’t it? The books capture the feel of living in a world, our world, that verges on another, marvelous one to which somebody else has the key. Out there, other people ride broomsticks, own elves, inflict unbearable torture with a cry of crucio, invest their souls in silver commodities, and keep their treasures safe in impregnable goblin-owned banks. Here our cars are repossessed, the elves own us, we save for months to buy a garden gnome, we calculate the cost-benefits of “extreme interrogation,” and worry whether Bank of America is going down. If only you could get past the barrier to Platform 9 3/4! But you need a Harvard MBA to break through; the other, the masterful King’s Cross is closed to you.
The stories show a split life not too unlike our own. Harry Potter is a masterpiece of realism! it’s the magic universe of sovereigns erected athwart our own subjection. The final Battle of Hogwarts, the climax of the series, will engross all eyes; but it’ll be fought between forces — Standard & Poors and BNP Paribas, let’s say — that might entice us to admire the one or the other, but that will never admit us as warriors or even allies. We’re too pathetic. All that’s left is to enjoy our spectatorship. You put on the 3-D glasses and exult in your exclusion. It’s a fun world to watch, the one that decides our lives but we don’t live in.
Unfortunately, even the movie tickets get more and more expensive.