- If there's anything missing from Mark Weisbrot's musings about the possibility of a U.S. debt downgrade, it's that the only significant threat to the country paying its bills has been the Republicans' reckless willingness to block routine approvals in the name of exactly the austerity policies the bond raters are pushing. But he's right on in his suspicion about the raters' motives:
It is clear that these credit rating agencies have a political agenda. Like most of Wall Street and the politicians that they can buy, they want the US government to cut spending and reduce its deficit. They are not particularly concerned about the more than 22 million Americans who are unemployed, involuntarily working part-time, or given up looking for work altogether. They would prefer a "grand bargain" on spending that cuts senior citizens' social security benefits. This statement from Moody's is a form of political blackmail on the part of the credit rating agencies.- Meanwhile, public servants in Canada are making a strong case against the Harper Cons' determination to feed that agenda - with PSAC holding an Ottawa rally yesterday, while correctional workers took the argument again dumb-on-crime policies to Stephen Harper's Calgary constituency office.
It's perhaps different from the corrupt system that led Moody's to give AAA ratings to more than 46,000 residential mortgage-backed securities between 2000 and 2007, many of which turned out to be worthless. Or the investment grade rating that the agencies gave to Enron until four days before its bankruptcy, or to Lehman Brothers until a few days before its collapse. Many of these ratings were likely influenced by the fees that the credit ratings agencies earned from the institutions whose securities they were rating.
And did I mention that Moody's, S&P and Fitch take about 90% of the revenue earned by the multibillion dollar ratings industry? Or that the three make about 98% of the ratings? There is nothing like a lucrative oligopoly to encourage all kinds of self-serving agendas.
- Martin Regg Cohn discusses how the Ontario NDP's renewed hold on the balance of power should lead to some policies actually aimed at job creation:
(W)hat good is popularity if you can’t do much good? Happily for Horwath, it’s also been a good summer for her party and policies.- Finally, Peter Julian fleshes out the federal NDP's position on economic development - featuring a focus on developing domestic industry beyond resource extraction:
Her bombshell byelection victory this month blocked the Liberals' bid for a majority — and allowed her to retain the balance of power. Without it, Horwath would have been powerless to pursue her party's agenda.
The other piece of good news: An unprecedented public speech by Bank of Canada governor Mark Carney late last month lambasting corporate Canada for sitting on a $560-billion stash of cash.
“This is dead money,” the governor lectured the business world.
Canada's influential central banker wasn't purposely cozying up to Horwath with his comments. But the NDP believes Carney’s musings coincide with one of its major policy planks: Corporations can't be trusted to create jobs with the cash lavished upon them through tax cuts — they need targeted hiring incentives to get the job done.
“What's very obvious is that the use of (reduced) corporate taxes for stimulus doesn't work,” Horwath told me. Now, she wants the minority Liberal government to get serious about her demands.
“I'm very hopeful though, considering what Mr. Carney has said, that our idea will have more cachet.”
For Horwath, the political and economic stars may be in alignment. She is keen to use her new-found political capital to put pressure on big business.
Q The oil industry is gearing up to produce around six million barrels per day in the next 20 years. Is the NDP against that development altogether or would you favour it if all the environmental conditions were met?[Edit: fixed typo.]
A There are two issues. First is the environmental pact. Due diligence is simply not being done, particularly by the federal government in terms of enforcing existing regulation. The rapid pace of the oil and gas development is worrisome in part because sustainability has not been established. But here is the other issue: We need to ensure the resources we develop should have, as much as possible, valueadded done in Canada. We are exporting raw bitumen, raw logs and raw minerals. The Conservative government's plan is to export more in raw state. This is a real problem because when you look at the disastrous trade deficits that we are seeing now in large part because we have a government that is focused on raw exports rather than the development of value-added products. We have lost half a million manufacturing jobs under the Conservatives' watch and they want to fuel raw exports rather than development of refinery capacity and upgrading capacity. When we are exporting raw bitumen, we are exporting jobs. We don't feel that the plan to carve out raw bitumen as fast as possible and ship it offshore is either environmentally sustainable or economically smart from a Canadian perspective.