The Bickerstaffe Record


A focus for our anger: Standard & Poor’s

07.30.09 | 4 Comments

(Longish post alert – 2,000 words.)

1  Where has the anger gone?

‘Where has all the anger gone?’ asks Duncan.

Good question, Duncan. 

The slightly heady days of the ‘Their Crisis, Not Ours’, for example,  seem a long time ago now, and what I suggested would happen back in September 2008 is now being played out.  The Conservatives, planning for their expectation of a general election victory, are planning vicious cuts that hit the poor, while making out that such moves are actually a welcome reality check, and while tinkering ineffectually, and even counterproductively, with the financial regulation system which failed the poor in the first place.

The queen is being t0ld privately that the financial high fliers were in denial, and that’s what brought everything crashing down around us, while the Conservatives, both national and local (to me) says it’s Labour, both national and local, that’s in denial.

But what can we actually do about this astonishing injustice? Where can we focus our anger in a way that actually changes things? 

2   The need to focus our anger

The key problem, of course, with protesting against rampant capitalism is that there’s just so bloody much of it. 

I remember, years ago riding through the City of London early one morning (I’d been on night duty at the hospital in Tooting, but was living temporarily on a mate’s floor in Archway as a result of personal poverty), just as an anti-capitalism demo was trying to get going.  

As I went by I heard the city boys laughing with each other at the absurdity of a few hundred hippies thinking they could bring down capitalism by waving some placards and wearing dreadlocks.   While I have more sympathy with your average dreadlocked hippy than with your average city boy, I could see their point.  I pitied the hippies, and went home to bed, before getting up to work on some union case work; using my abiding reasonableness and ability to string a sentence or two together in writing seemed a much better use of my time and energy in defence of working people.

That memory, along with other failures to properly involved with demos, has haunted me for a long time.  I greatly admire the energy and commitment of those, like Harpy, who haul themselves off to yet another demo, and often wonder whether they do it because they think just one more push at the edifice of capitialism will make it fall, or because they simply don’t want to let their comrades down.

I suspect it’s often the latter.

Surely, though, there has to be a better way to channel that admirable energy, focusing it on the protests and the direct action that has the greatest impact, not least because it’s tied into other complementary political actions.

And during this week, I’ve started to work out what that focus might be.

3.  A focus for our anger

Here, recently, I’ve picked upon the still (to me) quite startling notion that Standard & Poor’s, the biggest international credit rating agency, should have been both majorly instrumental in bringing about the financial crisis, and then be proceeding to throw its weight about telling us all how we’re going to have slash spending in order to keep the country ‘creditworthy’.

This astonishing hypocrisy, and indictment of the current market system, has been picked up elsewhere, notably by Andreas a couple of months ago, and yesterday again by Anthony Painter

This is what Anthony has to say, as lambasts the Conservatives for its desire to come over all macho about public spending cuts, and to use S&P’s excesses as an excuse:

‘Again, Phillip Hammond, a possible Chancellor in a Cameron government, describes the ‘sword of Damocles’ that is Standard & Poors who will reassess the UK’s credit worthiness in 2010 having already put it on notice. So Standard & Poors would be determining our economic policy. Can you imagine anything crazier than that? This would be the same Standard & Poors that was a factor in the financial crisis in the first place by over-rating securitised debt while being paid commissions by the issuers of that debt. Humility doesn’t come easy to our financial markets.’

 This would be bad enough.  Bit gets worse.

Not content with playing a major part in bringing unemployment, financial pain and (in the developing world) real hunger to millions upon millions of people across the globe, S & P published this report in March 2009, entitled ‘Toward a Global Regulatory Framework for Credit Ratings’.

Read it and weep.  Or rather, let the anger rise.

First comes the acknowledgment that S&P and its credit rating agency colleagues that things might just have gone a tiny little bit wrong.  In what must be the understatement of the year, the report says:

‘It is clear that a number of the assumptions credit rating agencies used between 2005–2007 in rating structured finance bonds backed by subprime mortgages have not held up. One unforeseen development was the extreme nationwide collapse in the U.S. housing market. Rating agencies and others, including banks, insurance companies, regulators, and policymakers, did not anticipate the full extent of what has become a global recession, fuelled by the implosion of the unregulated derivatives market, loose monetary policy, excessive liquidity, and record levels of institutional and personal debt.’

That little embarrassment glossed over, the report goes on to propose a few self-policed changes to ensure that ‘investors’ can have confidence in their ratings.  These are principally concerned with improving the transparency about the way in which conclusions are reached about credit ratings.

Never, anywhere in the report, is their the merest mention of their wider responsibilities; presumably they simply don’t consider that they have any.

But the most interesting, and anger-inducing, recommendation reads as follows:

‘Rating agencies that use ‘warning signals’ whenever possible, such as S&P’s CreditWatch and Outlook signifiers—to signal to the marketplace potential future rating changes—are important to investors. However, rating users need to understand that ratings can change suddenly based on market or industry-specific events. This possibility is a reason that regulators might carefully reconsider using ratings exclusively in their regulations.’


The first thing to be said is that this recommendation is actually quite hard to understand, and I suspect deliberately so.  If I interpret the mush correctly, though, it has within it an acknowledgment that the ‘credit watch’ and ‘outlook signifiers’ used by S&P do not amount to much in themselves, offering no considered opinion of general trends which are not influenced by short term events.  However, they suggest, they are going to continue to use them, and are hereby offering the ‘regulators’, in the vaguest possible way, the opportunity to make of them what they will!

And, of course, the ‘outlook signifier’ is precisely what S&P used in May to threaten the UK government over its budget deficit, in the knowledge that even the merest hint of the removal of overall AAA rating for the economy as a whole, and the higher debt management costs that go with that, will have much greater effect in the press than any sounder arguments about long term management of debt through sustainable growth.

And of course the Conservatives are only too happy to buy into this whole idea, arguing that the ‘market’ must be obeyed – by which they mean that the tainted, self-confessed untrustworthy word of S&P is more important to tem and their electoral chances than the future of the real economy, and that of the people who live within it.

And that, surely, should be a real cause for anger, and a cause for our action.

4  How to focus that anger

Of course, this level of detail about the shennagigans of S&P is a bit difficult to get on to a demo banner. As chants go, ‘What do we want? A more clearly enunciated exposition of the unreliablity and institutuional bias inherent to Standard & Poor’s Economic Outlook statements.  When do we want it?  At the end of the second quarter’ simply doesn’t ring true.

But the simplfied version – here is a firm which has helped destroy the world economy now seeking to order governments about and reimpose a neoliberal ‘investor-friendly world’ via arbitrary self-regulation – is surely more saleable.

The notion that Standard & Poor stand at the epicentre of a corrupt world system of world finance – that they are the real Masters of the Universe – and that ‘taking them down’ could cause a domino effect across other institutions – could have an appeal to those who would like to see the end of capitalism, and see it right now.

Because, in the end, the credit rating industry is a core element to the system and if it were abolished or reformed, much would indeed change in the way people do their business.

5   Anger, strategically allied

So perhaps the next big anti-capitalist demo would benefit from getting down to Canary Wharf, where S&P in the UK live, and setting about their protest.  I’m not going to start recommending a list of demands, but they might include:

a) A full public apology from S&P for what they’ve done;

b) All bonuses to be paid into a fund to tackle the most serious effects of the recession brought about by S&P and friends;

and right through to:

c) The abolition of the credit ratings industry as we know it.

But at the same time as demos are being planned and executed, other political action can be being put into effect. 

At a domestic level, perhaps the LRC etc might want to get involved with calls upon the government to investigate the way a private company like S&P can apparently get away with giving orders on how the economy should be run on behalf of investors, rather than everyone.

Perhaps Labour conference might like to debate and pass a resolution on the need for a complete overhaul of this area of the finance industry, and even the need to ban S&P’s current activities on the basis of its risk to a differently interpreted ‘national security’. 

Perhaps, internationally, governments might come together to take  S&P at its apparent word, and devise a new regulatory framework for assessing credit risk which adopts as key criteria the long term social and environmental consquences of investments over and above the short term benefits for investment, building upon the admirable UN principles (as yet largely unactioned) on socially responsible investment.

The possibilities are endless, but the general point is that, in co-ordnating both direct and indirection action towards quite specific targets at the heart of the capitalist system, the sum of all our parts might be greater than the whole.

In a great comment on Jonathan Rutherford’s recent, fairly vague LibCon post about the need for ‘plurality’ in left action and thinking, Left Outside (drawing on his earlier article about Polyani’s double movement thesis, says:

‘Another phase has since occurred where these victories have been rolled back. This phase began in the late 1970s and saw the destruction of these institutions and the reintroduction of market mechanisms.

Hopefully we’ll see another movement against this. However when it comes to the zombie of neoliberalism, it appears evident that ideologies do not exist on their own merit. Their precepts are carried and propagated by the class for which the ideology is useful. Neoliberalism is so successful still because it is still so useful to a lot of those in power. A double movement doesn’t occur on it’s own, in quickly, and the argument against the neoliberal ideology has to be fought both intellectually and physically.’

He’s right.  Perhaps a very real attack on S&P  is one way of putting both physicality and intellect into co-ordinated action against all that it stands at the centre of.


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