Russia And China Go After S&P And Fitch Through Creation Of New Ratings Agency
Just days after S&P and the U.S. Department of Justice were embroiled in negotiations to settle a charge tied to fraudulent ratings of junk bonds and mortgage backed securities, the ratings agency is finding its next crisis in the announcement on Jan. 13 by Russia and China of the creation of a new global ratings agency to compete with the Western led structures.
This announcement by members of the BRICS coalition is just another step in the creation of a completely duplicate and competitive infrastructure and financial system that is meant to offer the word and alternative to the dollar backed and U.S. led hegemony that currently exists over global finance.
Eurasian powers led by Russia quickly saw the need for a new and much more equitable ratings system after the U.S. government punished S&P for their downgrading of American debt in the wake of Washington's accumulation of over $18 trillion in unpayable debt over the past decade, and their unsound monetary policies through endless Quantitative Easing (QE). Additionally, Russia has also experienced the same political pressures Washington can put on a ratings agency through last week's downgrade of their currency by Fitch.
Ratings agencies are important in today's global financial system because they can mean the difference between lower or higher interest rates on securities such as sovereign debt, mortgage backed instruments, and even junk bonds tied to the fracking industry. However, with the U.S. in virtual control over all ratings authority, even in countries that they trade with but don't control their markets, the reasons behind having a single national agency controlling the determination of global assets are no longer valid.
As the East continues to rise in financial power, and formulate trade, banking, and equity markets that either rival or surpass those in Europe and the United States, the power and authority to determine the risk value on financial assets should migrate to the economy that dominates the world. And with China now the leading economy because of their productive capacities, and Russia the leading oil distributor because of connections and distributions, their joining together to create a new global ratings agency is just another block in the foundation that seeks to usurp Western control over the future of global trade and finance.
http://www.examiner.com/article/russia-and-china-go-after-s-p-and-fitch-through-creation-of-new-ratings-agency
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