One of the great services the credit crunch is the revelation that Market Implied Ratings (as plied by Moodys, Standard and Poors and Fitch) are a reactive instrument, followed by a wet thumb in the air before telling us what the markets already know.
Not exactly a load of balls, but something Ed Balls who picked a fight with the Chancellor because, erm, he got a black mark from Moodys ought to have treated with his own professed contempt. Here’s what he should have said, but didn’t:
It will be much more effective long-term to disrespect Moody’s judgment, and say it is an irrelevance, as this creates a continuity as and when Labour needs to get into an aggressive, economy-saving fiscal expansion post-2015 and the cretinous, austerity-crazed credit rating agencies get touchy about it.
This is actually an important moment. I hope Labour HQ has gone over the scenario, and gets its response right, in a way which avoids it being hoist by its own petard in 2016.
More simply put:
Cable is wrong. AAA downgrade matters, but mainly because Osborne said it did, not for any other reason.
— Richard Murphy (@RichardJMurphy) February 24, 2013
Copious amounts of tea, and an unctuously sympathetic arm over the Tory Chancellor’s shoulder saying, “I told it was all balls any way George” would have better strategy.
Then again, Balls will be Balls. Which is why, perhaps, some Tory commentators are beginning to warm to him.