When It Comes Right Down to It, It's Mainly a Con Game

Modern, consumer economies are essentially a confidence game.   When confidence is high, money flows; goods are produced, sold and bought; and we all (sort of) enjoy the boom.   When confidence is low, that all comes undone.   The public becomes fearful and stops buying; manufacturers stop producing and lay off workers and then we set up soup kitchens and bread lines.

Yet sometimes confidence isn't enough.   Sometimes economies can get so out of whack that illusions can't suffice to hide it.   And that's where the great ratings agencies - Moody's, Standard & Poor's, and Fitch Ratings - come in.   Investors look to them to gauge the credit risk of debt instruments, including government bonds or "treasuries."

The agencies are busy these days evaluating the credit worthiness of a lot of fiscally troubled nations such as Iceland, Ireland, Greece, Spain, Italy and even the United States.  S&P created quite a stir when it downgraded America's credit rating from AAA to AA+.   But just how safe are these agencies when they're dishing the dirty on powerful governments?

Governments can counterattack when they don't hear what they like from credit rating agencies.  The Obama administration fought back against S&P, even arguing that the agency used faulty math to reach skewed conclusions.  They specifically attacked Standard & Poor's 'credibility and integrity.'  S&P must have run their numbers again because they're sticking with their rating.

Yet in the land of all things Berlusconi, Italian police acting on orders from state prosecutors raided the offices of Moody's and Standard and Poor's.  The cops say they're investigating the role these agencies played in Italy's recent financial turmoil.  It's a pretty chilling message - "cross us and you can expect a criminal investigation."  Intimidation?  It sure as hell sounds like it.

It makes you wonder whether today's real con artists, those we most need to worry about, aren't rank and file swindlers but our governments.  It seems that ever since 9/11 they've become more secretive, less accountable and much less democratic.  That is quite true of our own authoritarian government and its autocratic Ruler.  When it comes to sleight of hand and bait and switch, Harper is a highly accomplished con artist. 

We used to hold that people shouldn't fear their government; their government should fear the people.  In some intangible ways and some very tangible ways I sense that's slipping away from us.