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Mehdi Hasan: Time to downgrade the downgraders

Standard and Poor's decision to downgrade the United States's credit rating is outrageous and undemocratic.

Prior to September 2008 and the near-meltdown of the global financial system, who had ever heard of the credit rating agencies? Who could name the so-called big three (Standard and Poor's, Moody's and Fitch), which exerted such huge power and influence over the global economy?

That's all changed now. The decision by Standard and Poor's (S&P) to downgrade the United States's creditworthiness, from top-notch AAA status to AA+, dominates today's news headlines and may finally force ordinary people across the world -- and, in particular, in the US -- to sit up and take notice of these unelected, unregulated, politicised private firms, with horrific track records and excessive power over democratic governments.

As I wrote in today's Guardian (prior to the downgrade decision by S&P, I hasten to add!):

In recent weeks, we have witnessed elected leaders in the world's most powerful nation dancing to the tune of David Beers. He's the moustachioed, chain-smoking head of sovereign credit ratings for S&P, the largest and arguably most influential member of the big three.

"You may have never heard of David Beers but every finance minister in the world knows of him," noted Reuters in a recent - and rare - profile of the analyst, who doesn't even have a Wikipedia page. It is Beers who recently downgraded Greece's credit rating to near-junk status, thereby making the EU's proposed rescue plan much more difficult. And it is Beers who now demands the US reduce its long-term budget deficit by $4tn - rather than the congressionally approved $2.4tn - and threatens to impose the first-ever US government downgrade, from AAA to AA. It isn't just the Tea Party holding the US to ransom.

Three questions come to mind. First, who elected David Beers or his Moody's and Fitch counterparts? By what right do they decide on the fate of governments, economies, debts and peoples?

Second, why should we care what Beers thinks? What credibility do he and his ilk have? The bipartisan Financial Crisis Inquiry Commission in the US has described the big three as "key enablers of the financial meltdown". The commission's January 2011 report concluded: "The mortgage-related securities at the heart of the crisis could not have been marketed and sold without their seal of approval. Investors relied on them, often blindly ... Their ratings helped the market soar and their downgrades through 2007 and 2008 wreaked havoc across markets and firms."

Third, would a downgrade in the US's credit rating really be that apocalyptic? Or could the world's biggest economy survive such a blow? Politicians and, in particular, finance ministers have fetishised the triple-A rating, and conventional wisdom says that a country's interest rates will rise sharply on a downgrade. But a study by JPMorgan Chase last week showed only a slight increase in lending rates for countries that lost their AAA rating. In May 1998, S&P marked down Belgium, Italy and Spain from AAA to AA, but 10-year rates barely moved in response. In some cases, rates fall. In Ireland, for instance, 10-year rates fell 0.18 percentage points a week after S&P took away the republic's triple-A rating in March 2009.

You can read the whole piece here.

You can read Reuter's fascinating profile of David Beers here.

Mehdi Hasan is a contributing writer for the New Statesman and the co-author of Ed: The Milibands and the Making of a Labour Leader. He was the New Statesman's senior editor (politics) from 2009-12.

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For a mayor who will help make Londoners healthier, vote for Tessa Jowell

The surgeon, former Labour health minister and chairman of the London Health Commission, Ara Darzi, backs Tessa Jowell to be Labour's candidate for London mayor.

London’s mayor matters. As the world’s preeminent city, London possesses an enormous wealth of assets: energetic and enterprising people, successful businesses, a strong public sector, good infrastructure and more parks and green spaces than any other capital city.

Yet these aren’t put to work to promote the health of Londoners. Indeed, quite the opposite: right now, London faces a public health emergency.

More than a million Londoners still smoke tobacco, with 67 children lighting up for the first time every day. London’s air quality is silently killing us. We have the dirtiest air in Europe, causing more than 4,000 premature deaths every year.

Nearly four million Londoners are obese or overweight – and just 13% of us walk or cycle to school or work, despite half of us living close enough to do so. All Londoners should be ashamed that we have the highest rate of childhood obesity of any major global city.

It’s often been said that we don’t value our health until we lose it. As a cancer surgeon, I am certain that is true. And I know that London can do better. 

For that reason, twice in the past decade, I’ve led movements of Londoners working together to improve health and to improve the NHS. Healthcare for London gave our prescription for a better NHS in the capital. And Better Health for London showed how Londoners could be helped to better health, as well as better healthcare.

In my time championing health in London, I’ve never met a politician more committed to doing the right thing for Londoners’ health than Tessa Jowell. That’s why I’m backing her as Labour’s choice for mayor. We need a mayor who will deliver real change, and Tessa will be that mayor.  

When she invited me to discuss Better Health for London, she had the courage to commit to doing what is right, no matter how hard the politics. Above all, she wanted to know how many lives would be saved or improved, and what she could do to help.

In Tessa, I see extraordinary passion, boundless energy and unwavering determination to help others.

For all Londoners, the healthiest choice isn’t always easy and isn’t always obvious. Every day, we make hundreds of choices that affect our health – how we get to and from school or work, what we choose to eat, how we spend our free time.

As mayor, Tessa Jowell will help Londoners by making each of those individual decisions that bit easier. And in that difference is everything: making small changes individually will make a huge difference collectively.  

Tessa is committed to helping London’s children in their early years – just as she did in government by delivering Sure Start. Tessa will tackle London’s childhood obesity epidemic by getting children moving just as she did with the Olympics. Tessa will make London a walking city – helping all of us to healthier lifestyles.

And yes, she’s got the guts to make our parks and public places smoke free, helping adults to choose to stop smoking and preventing children from starting.   

The real test of leadership is not to dream up great ideas or make grand speeches. It is to build coalitions to make change happen. It is to deliver real improvements to daily life. Only Tessa has the track record of delivery – from the Olympics to Sure Start.   

Like many in our capital, I am a Londoner by choice. I am here because I believe that London is the greatest city in the world – and is bursting with potential to be even greater.

The Labour party now has a crucial choice to make. London needs Labour to choose Tessa, to give Londoners the chance to choose better health.