The decision of the rating agency, Standard and Poor’s, to downgrade the credit rating of Ireland from AA to AA- was met with hypocritical gnashing of teeth by Irish establishment figures. The National Treasury Management Agency rushed to criticise S&P, saying that their approach was “flawed”. Minster of State, Dara Calleary declared that they used a “very negative analysis”.
The irony is that one year ago, when Ireland’s credit rating was being dropped by these very same rating agencies, they were treated as the high priests of international capitalism. Their ratings were held up as objective commentary and used to justify the drastic cutbacks in public services and savage attacks on public sector workers, which have then been used in turn to pressurise private sector wages down.
These policies were sold on the basis that Ireland would be rewarded for this “harsh medicine” by the financial markets and rating agencies. Yet the opposite has turned out to be the case.
Rather than laying the basis for economic recovery, the government’s deflationary measures have resulted in a downward spiral of unemployment and reductions in consumer spending, added to by the massive debt that the state is in as a result of its large scale bailouts of banks and speculators. Unemployment increased again in August and retail sales also saw yet another monthly decline.
The gap between the interest rate Ireland pays on its debt and what Germany pays now stands at a record high. The downgrade by S&P, simply brings their rating down to the AA- level that all of the other major rating agencies already have Ireland at! No “gratitude” is being shown by these rating agencies or the speculators who make up the financial markets. Instead, they smell blood as the economic situation worsens.
The government’s response to this downgrade will be to go further along the failed path they have already embarked on – implementing further cutbacks in an attempt to satisfy the markets. In the aftermath of the downgrade, the government reneging on its side of the “Croke Park deal” and cutting €4 billion rather than the planned €3 billion from the budget in December were both raised as possibilities. The result is predictable – a further downward spiral.
The dictatorship of these unelected, private rating agencies and the small number of super-rich speculators who constitute the financial markets must be rejected.