10/06/2011, 00.00
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Moody’s, instability and the world’s single currency

by Maurizio d'Orlando
Contacted by AsiaNews, the authors of the report that downgraded Italy’s debt chose not to speak. Just a few months ago, Moody’s chief analyst had praised Italy, saying it was not a country at risk. The downgrade is part of a plan to set up a world currency, the ‘bancor’. Before this can be done, Italy, the euro, the dollar and the world’s economy must be destroyed.
Milan (AsiaNews) – As AsiaNews had predicted[1], Moody’s downgraded Italian government bonds by three notches despite the lack of real bases for the move[2], i.e. the absence of new negative data on the country’s public debt. In fact, Moody’s report has something positive to say about recent trends in Italy[3], like the absence of major imbalances in the economy (for example, unemployment in Italy is not as high as in the United States and other countries), the lack of severe pressure on private financial and non-financial sector balance sheets[4] (in Italy, the government has not had to use taxpayers’ money to bail out banks or large companies like General Motors), or steps taken during the summer (like cutting the deficit by 10 per cent through lower public spending, something no country in the world of Italy’s size has had to do).

In order to explain their rationale behind the downgrade, Moody’s hapless analysts have had to go out on a limb to find any evidence to back their claims because there is no real substance to their decision, or if there is any, they will not say what it is even though we can imagine what they might have in mind. For the report’s authors, Alexander Kockerbeck and Bart Oosterveld, three factors underlie their arguments, but they all lack quantitative support and flow from the first point, namely some vague notion about “market sentiment”.

It would be easy to publish all the interviews and public statements made by Moody’s chief analyst Kockerbeck over the past few years. In them, he said Italy was among the countries least at risk. in fact, he praised the work of the Italian government. His last interview a few months ago, on 13 July[5], is a case in point, coming before Italy’s latest public spending cuts. In the absence of actual data, it would be easy to show how contradictory Moody’s claims are.

However, at AsiaNews we feel sorry for the great burdens Moody’s analysts must bear in personal and professional terms. Too often, they have come under unbearable pressures, as evinced in a complaint filed with the US Security and Exchange Commission by William J. Harrington, on 8 August 2011 [6]. Harrington quit Moody’s in 2010 after reaching the top analyst post, i.e. Senior Vice President. In his a submission, we understand why. In his view, there is a conflict of interest between the needs of stockholders and customers who pay for the agency’s services and the need for independent judgment in evaluating credit worthiness. Analysts who do not bend to meet the needs of customers and stakeholders are often transferred, subjected to disciplinary sanctions, abused or fired.[7]

For this reason, AsiaNews tried to reach the authors of Moody’s report to know what they meant by “market sentiments”. However, we were told they were not available for comments. This is quite understandable. Harrington does not say who Moody’s paymasters are but in a previous article[8], AsiaNews suggested that Moody’s (along with the other two dominant rating agencies, Standard & Poor’s and Fitch) owes its power to the International Swaps and Derivatives Association, a trade organisation of participants in the derivatives market with the power to issue ratings.

What we must do then is figure out ISDA participants’ goals on the basis of published documents. It is clear that the “market sentiment” ISDA participants have in mind is political in nature, and that their goal is to remove Silvio Berlusconi from power. A recent editorial article by the editor-in-chief of Corriere della Sera, Italy’s foremost newspaper, makes that clear. The paper is owned primarily by banks and financial interests.

All this could be dismissed as just another case of the usual, albeit undue interference exerted by financial interests in political affairs, as they try to impose a “new currency” on Italy and elsewhere at the expense of popular sovereignty. This would be bad, but nothing new.

However, there is more than meets the eye as suggested by an official paper by the International Monetary Fund, which does not deal with Italy alone, but rather touches the whole world, including Asia.

From the beginning, the paper makes it clear that the goal is to achieve a single world currency, named ‘bancor’ (in tribute to Keynes who first proposed it), to be issued by a world central bank. Section 50 (p. 27) of the report says, “Absent significant monetary instability or an injunction for the use of bancor for the making of an important set of payments (e.g. payment of taxes), surmounting the barriers to wide acceptance would be a key and perhaps prohibitive challenge.”

Putting aside the jargon, the meaning is clear. The goal of a single world currency cannot be achieved without messing up the world. Thus, the grounds for instability must be put in place. This confirms what was said previously, namely that the attack against Italy’s economy is not based on objective factors, but rather is a first step that would lead to the destabilisation of that country, followed by the dissolution of the dollar. The goal is to eliminate the last shred of popular sovereignty and independence, as shown by the recent indecent war in Libya and the lies spread by the world press[9].

In short, the goal is to force a single central bank upon the world’s nations, controlled by same world financial interests who monopolise the derivatives market. For the record, these are the same people responsible for the recent derivatives bubble.

[1] See Maurizio d’Orlando, “Economic Crisis: a controlled demolition,” in AsiaNews, 20 September 2011.
[2] See “Rating Action: Moody's downgrades Italy's government bond ratings to A2 with a negative outlook,” in Moody’s Investor Service, 4 October 2011.
[3] Moody’s wrote, “some positive credit attributes”.
[4] Moody’s wrote, “These include a lack of significant imbalances in the economy or severe pressure on private financial and non-financial sector balance sheets, as well as the actions undertaken by the government over the summer.”
[5] See C.Mar., “L’Italia è un paese relativamente stabile and non è a rischio di contagio,” (Italy is a relatively stable country and is not in danger of contagion), in Il Messaggero, 13 July 2011. See also “L’Italia non è tra i paesi più a rischio”, Il Sole-24, 13 January 2010, in which Kockerbeck said that Italy "non presenta squilibri importanti come quelli che si stanno verificando in altre economie europee" (does not exhibit important imbalances like those in other European economies”, the exact opposite of what he said in the statement issued on Tuesday evening. See footnote 2, above.
[6] See William J. Harrington, “Comments on SEC Proposed Rules for Nationally Recognized Statistical Rating Organizations,” in Security and Exchange Commission¸ File Number S-7-18-11, 8 August 2011. See, for example, the following statement: “The salient conflict of interest confronting Moody’s employees is that which arises simply from being employed by Moody’s.” See also following chapter, “Pre-2008: External Paymeisters Come First, Last and Always. Analysts to be Seen, Not Heard”.
[7] “Moody's analysts whose conclusions prevent Moody's clients from getting what they want, Harrington says, are viewed as "impeding deals" and, thus, harming Moody's business. These analysts are often transferred, disciplined, "harassed," or fired.” See a summary of the event in Business Insider. For those who cannot read the 78-page text, read an excerpt of his statement in the Business Insider.
[8] See Maurizio d’Orlando, “Economic Crisis: a controlled demolition,” in AsiaNews, 20 September 2011.
[9] See International Monetary Fund, "Reserve Accumulation and International Monetary Stability," 13 April 2010.
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