From today’s Guardian Editorial:
There are many criticisms that can and many caveats that should be made about the ratings agencies. The agencies are taken too seriously. They are players in the market as well as judges of the market. The different agencies don’t always agree with each other. They sometimes have a lousy record, especially with the pre-bust banks, about whose prospects they were all wilfully bullish…
If Mr Osborne had made some or all of these points over the past few years, he might have been intellectually entitled to dismiss the Moody’s verdict in the same way that Mr Cable did yesterday. But Mr Osborne never even went close to embracing a more nuanced view. On the contrary, for political rather than economic reasons, he fetishised the elimination of the deficit and fetishised the protection of the AAA rating. He was wrong to do so. Like the credit ratings agencies themselves, he misread the economic signals, persuading himself that tight fiscal policy would succeed in a global environment in which most other large economies were tightening too. Now they are discovering they all got it wrong together. The current recession is different and deeper. As Moody’s said last week, and as Mr Osborne will be forced to confirm in next month’s budget, sluggish growth (ie no real growth) will continue until past 2015.
But at least his own job is secure, even if it’s at the cost of everyone else’s.