Farewell, lost AAA
It is official. Two months and a half after I claimed all these “last chance” european summits would amount to nothing really important and would not change the course of the present events, France lost its “sacred” triple A ratings. Given that many people explained how unreliable these rating agencies are -after all the very same agencies did claim Greece had solid finances and Goldman Sachs was doing things right four years ago- it should not be a serious thing. Yet, the consequences of the loss of the AAA rating will be real, and will probably have a snowballing effect in Europe (another one).
I am not explaining that France is not an indebted country. In fact, very few european countries can claim they have clean public debts, and I won’t even mention the US debt. But the debt has been piling up in France and elsewhere since 30 years, thanks to a rather twisted amount of policies -cutting public spending, worsening economic conditions and lowering salaries while shoving more and more money to the top of the pyramid combined with reducing the amount of taxes collected, most of the time in favour of the wealthiest- and the beginning of the crisis in 2008 that prompted governments to offer bags of money to the banks and then having the same rating agencies who were claiming everything was fine tell the world the same governments were broke.
It is easy to see that governments were trapped in what could look like a pincer movement; but then there are pundits who might explain the whole unfolding of the events was “irrational” and happened “on the spur of the moment”. I rather see it as a whole set of rational decisions that were taken at some level while some levels down it appeared as some sort of unavoidable outcome from random, short term decisions. But whether one thinks of all this as a process or as an accident the issue we face today remains the same.
We have a huge national debt (granted, way smaller than anything the US have, even compared in proportion) that is fixable, but we also have governments who rush to do whatever they think the “Market” will like. More often than not, it means that the little people and the ever shrinking middle class must be punished . For what, we don’t really know, but the real question should rather be instead of whom . Because if there’s a categoy of people and entities who continue their “economic growth” in these times of crisis, that would be some of the wealthiest people in our nation and abroad. You may call them the 1%. You may call them the “Elite”. You may call them otherwise, but it does not really matter at this stage. What’s important to realize is the power and influence of money that makes up the incentive for governments to dismantle public services and to make life harder for the rest of the population. What is also important to realize, and what is much less discussed is how some entities and people actuall benefit from the crisis.
Part of the “reforms” to “reimburse the debt” (which turns out to be a dubious concept itself as France, since 1973 cannot devaluate its money just like any other country outside the euro-zone) always (why?) involve selling off entire, profitable parts of public service. Such a pawning operation never benefits the people, but always benefits a few. It is often seent that the same people who benefit from this sale by taking control of the new privatized structure are powerful, and part of the people who usually advise the same politicians who keep on explaining that we must make more efforts to “repay the debt”, the debt that we could in fact manage much better, but that some people don’t want us to, as they might lose money in this. So while the republic itself loses power, stops its people from benefiting from social security and other public services, it graciously offers to a selected few the ability to monetize these services. I always wondered why, if we really had to sell these services, the government did not auction this to its very own people . For instance, as public service XYZ gets privatized it is sold to thousands or even millions of people (each one putting anywhere between 10 euros and 100 euros) , and therefore would remain in the public trust. That was a common operation during the XXth century, but guess what, it seems that it does not please some very few people with a lot of influence. (I’m sure there’s a perfectly rational explanation on why simple people cannot own such a structure and that it must be pawned off to major corporations).
So what did France lose by losing AAA? In fact, not much, as the dices had already been thrown a while ago. A nice, velvety red curtain just fell of this past week, that’s all; and now things will become officially more difficult for most of us.
Happy New Year everyone…
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