By: Michael P

Michael P — Sat, 25 Dec 2010 01:43:09 +0000

I lived in Portugal until a few months ago. This is a perfect example of a country at the mercy of the credit rating agencies. On the flagship evening news of the national channel there are regularly reports about the murmurings of the agencies and how this may affect national economic policy. Two days ago Fitch further downgraded Portugal’s rating and indirectly called for further reduction of the deficit, which translates to cuts in public spending and further flexibilisation of the labour market (the agencies have bashed home this points over the past few months). The government already has plans for reform of the labour code in order to facilitate sackings – in a country where a large part of the workforce is already casual or on so-called “green tickets”, which means legal self-employment and exclusion from social insurance and all employment rights. To give some current context, many local authorities are keeping schools open which will provide meals over the Christmas holidays to ensure that “the poorest children will have at least one meal a day” (Rui Rio, Mayor of oPorto). How many of those deciding on the rating have spent a prolonged period in the country in order to become acquainted with its business and working practices, its political and economic history, its major industries and transport infrastructure – let alone set foot in the country? The author of this article is absolutely right when he says there is no accountability over the credit rating agencies.

Comments on: Fiscal fire-raisers

By: Michael P