Fitch - one of the less-disreputable Rating Agencies - has indicated that the UK could soon loose its AAA rating, and thus be seen as a worse credit risk than any other leading economy.
There is no surprise in the observation that the British Treasury is creating so much debt that British Government securities may become devalued. But it is very sad that the media can take the comments of any rating agency seriously. The agencies' collective failure adequately to value a huge range of financial 'products' - or the companies that issued them - was a major factor is allowing the credit bubble to develop, which ended in the credit crunch; which in turn created a crisis for the 'real economy' that will take years to work itself out.
Notwithstanding the agencies' disastrous impact ,government and regulators - not least our very own FSA - use agency ratings of businesses and of financial assets because without them they would have no systematic valuation medium at all.
Just as governments have to use the businesses that made the bubble as the means of getting out of the consequential mess, so they have to accept as authoritative agency ratings that can directly harm them.
Truth really is stranger - and even sadder - than fiction.
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