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Finland is the last stable Aaa eurozone nation standing, as Moody's downgrades the euro core

Moody's move is ballsy, but makes no sense.

The credit ratings agency Moody's has slashed three of the four eurozone countries it previously ranked as stable triple-A, leaving Finland the last nation to hold the gold-plating rating. Germany, Luxemburg and the Netherlands have all been cut to negative outlook, indicating that the agency has strong fears that they will be forced to cut their ratings to Aa or lower in the near future.

The move has prompted bafflement from observers, since it seems to indicate that Moody's view Finland as less likely to default on its debts than Germany. The CRA has explained that it downgraded:

. . .Those triple A-rated euro area sovereigns whose balance sheets are expected to bear the main financial burden of support.

Which is all very well, except Finland is also expected to bear the burden of support, as all solvent eurozone nations are. But Moody's thinks that that isn't a concern, because:

Its small and domestically oriented banking system, its limited exposure to, and therefore relative insulation from, the euro area in terms of trade, and its attempts to collateralise its euro area sovereign support together provide strong buffers which differentiate it from the other Aaas.

As Slate's Matt Yglesias writes:

Try to sketch out a situation in which Germany is defaulting on its debts but Finland isn't because Finland has "collateral" from Spain. 

Are they marching an army across the entirety of Germany and France to collect this debt? No. No way. I don't think there's any real credit risk around Finland, but unless something wild changes in the realm of geopolitics, Finland will always be slightly riskier than Germany due to the fact that the Russians might invade and conquer Finland.

There has long been suspicion that ratings agencies are basically making it up as they go along. It's certainly the case that markets ignore their pronouncements when it comes to sovereigns, and it seems likely that they are actually incapable of giving a coherent narrative as to what they are actually ranking nations on.

But now they've gone and annoyed the Germans, writes the FT:

Moody’s judgments are likely to deepen anger in Germany and elsewhere at the decisions taken by rating agencies, which have faced calls for stricter regulation.

Whether or not regulation is forthcoming, this latest announcement makes it clear that credibility is nowhere to be seen.

Alex Hern is a technology reporter for the Guardian. He was formerly staff writer at the New Statesman. You should follow Alex on Twitter.

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Labour tensions boil over at fractious MPs' meeting

Corbyn supporters and critics clash over fiscal charter U-turn and new group Momentum. 

"A total fucking shambles". That was the verdict of the usually emollient Ben Bradshaw as he left tonight's Parliamentary Labour Party meeting. His words were echoed by MPs from all wings of the party. "I've never seen anything like it," one shadow minister told me. In commitee room 14 of the House of Commons, tensions within the party - over the U-turn on George Osborne's fiscal charter and new Corbynite group Momentum - erupted. 

After a short speech by Jeremy Corbyn, shadow chancellor John McDonnell sought to explain his decision to oppose Osborne's fiscal charter (having supported it just two weeks ago). He cited the change in global economic conditions and the refusal to allow Labour to table an amendment. McDonnell also vowed to assist colleagues in Scotland in challenging the SNP anti-austerity claims. But MPs were left unimpressed. "I don't think I've ever heard a weaker round of applause at the PLP than the one John McDonnell just got," one told me. MPs believe that McDonnell's U-turn was due to his failure to realise that the fiscal charter mandated an absolute budget surplus (leaving no room to borrow to invest), rather than merely a current budget surplus. "A huge joke" was how a furious John Mann described it. He and others were outraged by the lack of consultation over the move. "At 1:45pm he [McDonnell] said he was considering our position and would consult with the PLP and the shadow cabinet," one MP told me. "Then he announces it before 6pm PLP and tomorow's shadow cabinet." 

When former shadow cabinet minister Mary Creagh asked Corbyn about the new group Momentum, which some fear could be used as a vehicle to deselect critical MPs (receiving what was described as a weak response), Richard Burgon, one of the body's directors, offered a lengthy defence and was, one MP said, "just humiliated". He added: "It looked at one point like they weren't even going to let him finish. As the fractious exchanges were overheard by journalists outside, Emily Thornberry appealed to colleagues to stop texting hacks and keep their voices down (within earshot of all). 

After a calmer conference than most expected, tonight's meeting was evidence of how great the tensions within Labour remain. Veteran MPs described it as the worst PLP gathering for 30 years. The fear for all MPs is that they have the potential to get even worse. 

George Eaton is political editor of the New Statesman.