February 6, 2013
The US state has officially appealed against Standard & Poor’s (S&P) accusing the financial services company for purposedly upgrading toxic loans to category AAA in 2007, just few months before the mortgage meltdown was to be unveiled and started shrinking the American and then the global economy into downturn.
The value of these loans had collapsed few months later and stakes had been completely ravished. This is the first time in history that such an appeal is turned against a financial services company from a state, mainly being linked with the financial crisis. If the verdict is to be turned for the US appeal, it would certainly be a fundamental step towards put a bit of control to the almost inconsistent “estimations” made by the company against overdebted states and the credibility leverage they attain in the global market.
Just after the official announcement of the appeal, the performance of S&P has fallen tremendously by 14% in the closure of Wall Street, whereas a similar financial services company, Moody’s, also pinpointed a singnificant fall of about 11%.
The power and influence of S&P have grown unexpectedly during the yeas of the crisis, and it had been many times that government decisions, EU decisions, and aspects of the IMF policy had been designed under the consideration of S&P’s estimations and outlooks. It goes without saying that the power of S&P has been that imposing that the so-called “debt relief” as well as the austerity program of Greece and Spain had first started being implemented through the downgrade of the viability of the Greek banks and the public spending management by S&P. Similar was the way for Cyrpus later. Therefore, there are well-grounded allegations that the aforementioned governments along with EU and the IMF were influenced and determined by these estimations.
Great Britain was also involved in the analysis of S&P lately dealing with the plausibility that the Tory could afford the public debt of the county and sustain some prospects of growth in 2013 and 2014. The analysis provided, while giving emphasis to the negative aspects of the crisis and debt management, does not provide any specific exit or solution to the crisis. It is merely a well-designed effort to impose a certain nature in the market and impede any hopes for recovery.
After all, the decision of the US state to sue S&P is considered to be a great step towards taking “revenge” againt any precipitory and biased provision of financial estimations. It remains to see whether or not the American court will have the same perspective.Author : Dimitris Rapidis