Show Hide image

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.

kerim44 at Wikimedia Commons
Show Hide image

Xenophobic graffiti at a London Polish centre is a dark sign of post-Brexit Britain

The centre's chairwoman says an incident of this kind has never happened before, and police are treating it as a hate crime. 

Early on Sunday morning, staff arriving at the Polish Social and Cultural (POSK) centre in west London's leafy Ravenscourt Park were met with a nasty shock: a xenophobic obscenity smeared across the front of the building in bright yellow paint. 

“It was a standard, unpleasant way of saying ‘go away’ – I'll leave that to your interpretation,” Joanna Mludzinska, chairwoman of the centre, says the next morning as news crews buzz around the centre’s foyer. The message was cleaned off as soon as the staff took photo evidence – “we didn’t want people to walk down and be confronted by it” – but the sting of an unprecedented attack on the centre hasn’t abated.

“Nothing like this has ever happened before,” Mludzinska tells me, shaking her head. “Never.”

The news comes as part of a wash of social media posts and police reports of xenophobic and racist attacks since Friday’s referendum result. It’s of course difficult to pin down the motivation for specific acts, but many of these reports feature Brits telling others to “leave” or “get out” – which strongly implies that they are linked to the public's decision on Friday to leave the European Union. 

Hammersmith and Fulham, the voting area where the centre is based, voted by a 40-point margin to remain in the UK, which meant the attack was particularly unexpected. “The police are treating this as a one-off, which we hope it is,” Mludzinska tells me. They are currently investigating the incident as a hate crime. 

“But we have anecdotal evidence of more personal things happening outside London. They’ve received messages calling them vermin, scum [in Huntingdon, Cambridgeshire]. It’s very frightening.” As one local Polish woman told the Mirror, there are fears that the referendum has “let an evil genie out of a bottle”. 

For those unsure whether they will even be able to stay in Britain post-referendum, the attacks are particularly distressing, as they imply that the decision to leave was, in part, motivated by hatred of non-British citizens. 

Ironically, it is looking more and more likely that we might preserve free movement within the EU even if we leave it; Brexit campaigners including Boris Johnson are now claiming immigration and anti-European feeling were not a central part of the campaign. For those perpetrating the attacks, though, it's obvious that they were: “Clearly, these kind of people think all the foreigners should go tomorrow, end of,” Mludzinska says.

She believes politicians must make clear quickly that Europeans and other groups are welcome in the UK: “We need reassurance to the EU communities that they’re not going to be thrown out and they are welcome. That’s certainly my message to the Polish community – don’t feel that all English people are against you, it’s not the case.” 

When I note that the attack must have been very depressing, Mludzinska corrects me, gesturing at the vases of flowers dotted around the foyer: “It’s depressing, but also heartening. We’ve received lots and lots of messages and flowers from English people who are not afraid to say I’m sorry, I apologise that people are saying things like that. It’s a very British, very wonderful thing.”

Beyond Hammersmith

Labour MP Jess Phillips has submitted a parliamentary question on how many racist and xenophobic attacks took place this weekend, compared to the weekends preceding the result. Until this is answered, though, we only have anecdotal evidence of the rise of hate crime over the past few days. From social media and police reports, it seems clear that the abuse has been directed at Europeans and other minorities alike. 

Twitter users are sending out reports of incidents like those listed below under the hashtag #PostBrexitRacism:

Facebook users have also collated reports in an album titled Worrying Signs:

Police are currently investigating mutiple hate crime reports. If you see or experience anything like this yourself, you should report it to police (including the British Transport Police, who have a direct text number to report abuse, 61016) or the charity Stop Hate UK.

HOPE not hate, an advocacy group that campaigns against racism in elections, has released a statement on the upsurge of hatred” post-referendum, calling on the government to give reassurance to these communities and on police to bring the full force of the law” to bear against perpetrators.

The group notes that the referendum, cannot be a green light for racism and xenophobic attacks. Such an outpouring of hate is both despicable and wrong.

 

Update 28/6: 

The National Police Chief's council has now released figures on the spike in hate crime reports following the referendum. Between Thursday and Sunday, 85 reports were sent to True Vision, a police-funded crime reporting service. During the same period four weeks ago, only 54 were sent - which constitutes a rise of 57 per cent. 

In a statement, Mark Hamilton, Assistant Chief Constable for the National Police Chiefs’ Council Lead for Hate Crime, said police are "monitoring the situation closely". 

Barbara Speed is a technology and digital culture writer at the New Statesman and a staff writer at CityMetric.