Now We Can We Rest Easy: Brussels Bureaucrats Are Protecting Us From Financial Risk

The Soviet leadership did not publish deliberately falsified statistics. They just dropped statistical reporting when things went bad. Outside observers could get a sense for how well the economy was doing by the number of pages in the annual statistical handbook.

It seems as if Brussels bureaucrats have learned from Soviet practice.

The European Union Commission, in its latest proposed regulations of financial markets, wants to prevent rating agencies from releasing their reports on European Union member countries. According to the Commission spokesperson: “When the Commission comes to the conclusion that a rating is not correct, it can set it aside for a specified period of time.” The temporary ban should prevent rating agencies from pushing debtor countries deeper into crisis, the spokesperson declared.

This provision makes Brussels bureaucrats arbiters of whether ratings agencies know what they are doing. Politician/bureaucrats, not Fitch, Moody’s or S&P, decide the level of risk of a country’s sovereign debt. Rating agencies about to lower the rating of a crisis country can be muzzled by the EU regulators. (And I guess no one will know about this!)

Speak about shooting the messenger bringing bad news! Such brilliant measures will surely make the financial world a safer place.