If the US credit rating is downgraded from its AAA status, as Moody's and Standard & Poor's threatened to do last week, it would shake a pillar of the global economy. And Standard & Poor's went one further, spelling out to US politicians exactly by how much the US deficit should be cut.
Is a warning on US debt warranted? Almost certainly. But should a ratings agency be setting budgetary policy? Not likely.
There have been some bitter pills in recent weeks. Greece and Portugal's sovereign debt ratings were downgraded to junk as the euro zone contagion spreads. That had the major EU countries crying foul at the agencies' "interference" and calling for reforms that would reduce the influence of the big three - Moody's, Standard & Poor's and Fitch.
The irony is that so much controversy has been stirred up by statements that look remarkably like common sense. Greece and Portugal (and several other EU countries, for that matter) are saddled with debts that they simply cannot pay. And the United States nears its own $14.3 trillion debt ceiling ahead of the August 2 deadline.
The ratings agencies might be criticised for making dire pronouncements in the middle of a crisis, but equally we should ask the question: why did they wait so long?
Not everybody has been so quiescent. China's Dagong credit rating agency says it is just "a matter of time and extent" before it downgrades US debt, again. Already Dagong values it several notches lower than the western agencies do.
But the big three agencies still punch above their weight and their statements move markets. This, despite the admitted failures that led to the last financial crisis, when worthless subprime debt was also ranked AAA. At the time, hard questions were asked about the agencies' capability to fairly evaluate the same companies that paid their bills.
Now EU countries are questioning their capability to rate sovereign economies. It is the right question for the wrong reasons. The point is not to quash bad news about euro zone debt levels, but to recognise that the agencies are not omniscient when it comes to risk.
After the mistakes leading to 2008 and 2009, the agencies defended themselves by saying credit ratings - in that case, totally inaccurate - were just "opinions". It's time to take them at their word.
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MATCH INFO
Champions League quarter-final, first leg
Tottenham Hotspur v Manchester City, Tuesday, 11pm (UAE)
Matches can be watched on BeIN Sports
Top 10 most polluted cities
- Bhiwadi, India
- Ghaziabad, India
- Hotan, China
- Delhi, India
- Jaunpur, India
- Faisalabad, Pakistan
- Noida, India
- Bahawalpur, Pakistan
- Peshawar, Pakistan
- Bagpat, India
ELIO
Starring: Yonas Kibreab, Zoe Saldana, Brad Garrett
Directors: Madeline Sharafian, Domee Shi, Adrian Molina
Rating: 4/5
Killing of Qassem Suleimani
Company%20profile
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Quick pearls of wisdom
Focus on gratitude: And do so deeply, he says. “Think of one to three things a day that you’re grateful for. It needs to be specific, too, don’t just say ‘air.’ Really think about it. If you’re grateful for, say, what your parents have done for you, that will motivate you to do more for the world.”
Know how to fight: Shetty married his wife, Radhi, three years ago (he met her in a meditation class before he went off and became a monk). He says they’ve had to learn to respect each other’s “fighting styles” – he’s a talk it-out-immediately person, while she needs space to think. “When you’re having an argument, remember, it’s not you against each other. It’s both of you against the problem. When you win, they lose. If you’re on a team you have to win together.”
WHY%20AAYAN%20IS%20'PERFECT%20EXAMPLE'
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More from our neighbourhood series:
COMPANY%20PROFILE%20
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The specs: 2018 BMW R nineT Scrambler
Price, base / as tested Dh57,000
Engine 1,170cc air/oil-cooled flat twin four-stroke engine
Transmission Six-speed gearbox
Power 110hp) @ 7,750rpm
Torque 116Nm @ 6,000rpm
Fuel economy, combined 5.3L / 100km
UAE currency: the story behind the money in your pockets
RESULTS
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Mohammed bin Zayed Majlis
Emergency phone numbers in the UAE
Estijaba – 8001717 – number to call to request coronavirus testing
Ministry of Health and Prevention – 80011111
Dubai Health Authority – 800342 – The number to book a free video or voice consultation with a doctor or connect to a local health centre
Emirates airline – 600555555
Etihad Airways – 600555666
Ambulance – 998
Knowledge and Human Development Authority – 8005432 ext. 4 for Covid-19 queries
VEZEETA PROFILE
Date started: 2012
Founder: Amir Barsoum
Based: Dubai, UAE
Sector: HealthTech / MedTech
Size: 300 employees
Funding: $22.6 million (as of September 2018)
Investors: Technology Development Fund, Silicon Badia, Beco Capital, Vostok New Ventures, Endeavour Catalyst, Crescent Enterprises’ CE-Ventures, Saudi Technology Ventures and IFC
Company%20Profile
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The specs
Engine: Direct injection 4-cylinder 1.4-litre
Power: 150hp
Torque: 250Nm
Price: From Dh139,000
On sale: Now
MATCH INFO
Liverpool 3
Sadio Man 28'
Andrew Robertson 34'
Diogo Jota 88'
Arsenal 1
Lacazette 25'
Man of the match
Sadio Mane (Liverpool)
Learn more about Qasr Al Hosn
In 2013, The National's History Project went beyond the walls to see what life was like living in Abu Dhabi's fabled fort:
The specs
Engine: 4.0-litre V8
Power: 503hp at 6,000rpm
Torque: 685Nm at 2,000rpm
Transmission: 8-speed auto
Price: from Dh850,000
On sale: now
Sole survivors
- Cecelia Crocker was on board Northwest Airlines Flight 255 in 1987 when it crashed in Detroit, killing 154 people, including her parents and brother. The plane had hit a light pole on take off
- George Lamson Jr, from Minnesota, was on a Galaxy Airlines flight that crashed in Reno in 1985, killing 68 people. His entire seat was launched out of the plane
- Bahia Bakari, then 12, survived when a Yemenia Airways flight crashed near the Comoros in 2009, killing 152. She was found clinging to wreckage after floating in the ocean for 13 hours.
- Jim Polehinke was the co-pilot and sole survivor of a 2006 Comair flight that crashed in Lexington, Kentucky, killing 49.
Company%20Profile
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