The AAA rating, by Mr Micawber’s definition (and that of reality and your grandmother) is earned when your income just exceeds your expenditure and that future prospects are stable. Neither of these simple criteria apply to any country in Europe, including Germany, and certainly not to the USA or to Great Britain. So why all the excitement when the USA which has not met these criteria for years (as indeed, we have not) loses the AAA rating?
Politicians have been lying their heads off for years, and money, an artificial contstruct at best, has been warped far away from its original purpose (a means of exchange) – that’s why. The incredible thing, to me at least, is that everyone (journalists, financial services and economists – but not the banks!) has been believing them and the warped money definition – but it seems that some have at last woken up to the fact that having politicians in charge is just like a company being run by the marketing department. Reality will bite – once the customer has bought the product and found it not to be as advertised.
It has been a long time coming but Mr Micawber’s lesson is slowly beginning to be understood by economists.
Of course it will be a few weeks more before politicians and banks can bring themselves to understand, but reality will bite, sooner or later. It really is so easy to understand.
The Thatcher era started off the real stupidity of modern ‘fast’ stock market madness and the Blair / Brown followed on like unthinking lap dogs. Cameron is still lapping at the bowl of Blair’s stupidity – he (Cameron) will probably be the last to get it.
But its all OK – really, if the banks are allowed to “take their haircut” – as they must in order to start correcting the massive overvaluation of the banks and the stock markets around the world.
It will take just one brave politician somewhere to start the process – say with RBS, or Lloyds (banks that we the people now own). Return the banking model to that of the 1960s and a lot of very rich people will lose billions but reality will slowly return to the world.