Mad George 2: Beyond Moodydome

So the credit agency Moody’s has downgraded the UK’s credit rating from AAA to AA1 due to medium term sluggish growth, the projected continuation of the austerity measures into the next parliament, and the fragility of the UK’s balance sheet. All this sounds like very frightening stuff, doesn’t it? The shit has really hit the fan. We are all fucked. Already I can hear baying mobs of people roaming the streets clad in leather pants wielding machetes and taking off the heads of all the people who are wearing a different shade of leather pants. A thunderdome has been erected just by Leicester Square and squads of former telephone hygienists who are now cage fighters are oiling up and sharpening their sharpened slate tipped sticks. Babies are eating pools of feculence on the flinty rubble of destroyed buildings.

Hmm. My imagination might be running a little bit Tahrir Square on that one. Fact is, the US and France have been downgraded (the US is lower than the UK, France is now the same) and their cost of borrowing hasn’t changed one iota. Fact is, neither will the UK’s. The problem with the international credit agencies (Standard & Poor, Fitch, and the aforementioned Moodys) is that for decades they were highly sought after purveyors of information without people realising that they were completely full of shit and whose data means nothing at all in an emperor’s new clothes type scenario. With everything coasting along nicely all they did was rubber stamp things. When the shit hit the fan they didn’t move quickly enough or even give any warnings like, you know, they were being paid to do. Enron was rosy until they were found out. Freddit Mae were coasting along fine flinging out toxic sub-prime debt packages until Warren Buffett said something on TV then the credit agencies made a statement whilst putting their trousers back on hurriedly. There are other numerous criticisms of them but the point is that the credit agencies don’t really matter.

Unless, of course, your name is George Osborne, erstwhile Chancellor of the Exchequer of the United Kingdom of Great Britain and Northern Ireland, who has staked his entire Chancellorship on the UK maintaining its cherished triple A credit rating. If it got downgraded, then George Osborne would be pretty embarrassed. Well, it turns out, that triple A status doesn’t really matter now that it has been downgraded according to Curious George.