Projection or Prescience?
Vladimir Putin weighed in on the ouster of S&P’s CEO:
Russian Prime Minister Vladimir Putin on Wednesday appeared to link the resignation of Standard & Poor’s chief executive to the agency’s downgrade of the U.S.’s sovereign rating earlier this month.“We all know what goes on in the financial world. Here you have the S&P ratings agency lowering the U.S. sovereign debt rating. And now they fired the agency’s head, and started an investigation regarding the agency itself,” Mr. Putin told a meeting of Russian academics, Interfax news agency reported.
“There is much that’s unclear about the situation, many things which are, let’s say, superficial,” Mr. Putin said.
To quote Joe Biden (always dangerous, I know), Putin’s suspicions are completely understandable. That would be the obvious inference regarding a similar situation in Russia.
The more interesting question is whether Putin is merely projecting/mirror-imaging, or is instead correct in his conclusions.
Developments in recent years, most notably from 2008 on, and especially post-January, 2009, increase the odds that Putin has in fact nailed it. There has always been an element of gangsterism in American government (as in any government), but those tendencies have become more overt and numerous in recent years. So, as a Bayesian, I would say that my estimate of the likelihood that Putin is right is far higher now, than it would have been several years ago.
There is an ironic sort of convergence in this story. One of the reasons my interest in Russia was rekindled several years ago after decades of slumber is that it struck me as a classical liberal (libertarian, if you must) dystopian novel come to life. It illustrated all of the dysfunctions that arise in the absence of a rule of law and particularly property rights, the atomization of civil society, the dominance of a government operating with few real institutional checks, and the intersection between private economic interests and said unchecked government.
A crucial function of a dystopian novel, of course, is to point out through extension and exaggeration what will happen if existing repressive tendencies and features in society grow. If the leading figure in a real world dystopia has, in fact, correctly diagnosed the reason why Deven Sharma was ousted from S&P, it would indicate that the US is itself slouching towards dystopia.
I have little respect for the rating agencies, and recognize that they are in many respects government creations and benefit from various government protections and mandates. That said, N wrongs don’t make a right. Better to eliminate privileges as a matter of principle, than to strongarm a company for having the temerity to question Leviathan’s solvency.
So I hope Putin is merely projecting, but I would also lay non-trivial odds on his prescience, at least in this matter.
There are certainly some interesting aspects to this S&P investigation that I haven’t seen raised in the media.
(1) It began before the downgrade, true, but on the other hand it already seemed to be common knowledge that S&P would downgrade well before they actually did so. Are the two related?
(2) The ratings agencies all seem to have engaged in fraud and corporate blackmail. Moody’s in particular was egregious about it. But S&P seems to be the only one of the three to be investigated. Why is that the case?
Comment by Sublime Oblivion — August 24, 2011 @ 3:18 pm
@S/O–Yes, all three biggies are basically indistinguishable for what they did in the housing boom, though I would chalk that up to incompetence rather than malice for the most part. Why was S&P singled out? One salient fact: Buffett has a big stake in Moodys. Obama clings to Buffett like a drowning man to a piece of wood. Buffett says things that advance Obama’s agenda. There’s a symbiotic relationship between the two. One cannot discount the significance of that when thinking about the answer to your question.
Thanks for the info re: Buffet. Now what’s next, speculation that this Exxon Julia well in the deep Gulf is being kept offline due to Soros heavy investment in Petrobras? The two projects are competing after all for virtually the same very rarified, highly expensive equipment, if nothing else.
And if you notice that the Vancouver-based Russian gold miner that was the only one to be nationalized by Chavez last week gets a nice fat concession in the Amur region over the next few months, would that mean that they were playing ball in a Kremlins’ gambit to push up the value of the world’s de facto reserve currency, gold? Which Russia (and almost as importantly to the Kremlins, Germany) has a lot of? And are the CME gold limits and effort to push back?
You’ve shied away before from suggesting the CME might be doing the White House’s bidding. But in this thing? Seems easier to take physical delivery if you’re long lots of gold futures contracts than crude, if nothing else. I’m no SWP but I would think position limits in the crude market would have more effect than for gold.
Or are the ZeroHedge lads right, that every CME gold position hike is simply another Chinese buying on the dips opportunity?
Comment by Mr. X — August 24, 2011 @ 6:50 pm
Or maybe Uncle Sam for the last several years has been just as gangsta, if not more so, than the Kremlins. The gloves are just off now. Maybe we took out Gaddafi because of the African gold dinar, and petrodollar warfare is a reality.
Comment by Mr. X — August 24, 2011 @ 6:51 pm
Your comments about a dystopian novel are genius. It is like Neuromancer without the biotech. God help us if the Skolkovo nano tech takes off but thankfully small chance.
Comment by pahoben — August 24, 2011 @ 8:28 pm
http://www.humanevents.com/article.php?id=45701
Stupid is as stupid does. But these MIC whores probably think they can succeed in baiting Russia into doing something stupid, rather than proceeding with plan A which is promoting gold coins with Tsar Nicholas II’s likeness and two-headed eagles and marketing them to American Tea Partyers on Glenn Beck TV while parachuting Igor Panarin into Texas to promote its secession as payback for the American Commmittee for Peace in Chechnya.
As Brother Ron Paul says, it’s time to quit this.
Comment by Mr. X — August 24, 2011 @ 11:57 pm
It’s good to see SUBLIME PSYCHPATH admit how utterly wrong it is for government to select out certain alleged wrongdoers while ignoring others. Thus, it is now clearly established that the Russian government’s prosecution of Mikhail Khodorkovsky for doing, if anything, only EXACTLY what numerous favored oligarchs who currently feast at Putin’s table also do, the only difference being Putin’s favor.
Now, SUBLIME PSYCHOPATH must call for Putin’s ouster.
Meanwhile, perhaps we might pause to consider the fact that S&P was simply and egregiously wrong, twice, and that the it’s better not to wait for the third strike. Correct me if I’m wrong, but Moody’s has not said that the world’s most powerful and reliable economy might not pay its debts, has it?
Comment by La Russophobe — August 25, 2011 @ 5:08 am
It’s good to see SUBLIME PSYCHPATH admit how utterly wrong it is for government to select out certain alleged wrongdoers while ignoring others.
It’s good to see La Retard as reading comprehension-challenged as always. For a start, where did Sublime Psychopath say the S&P investigation is “utterly wrong”?
Of course it isn’t. I can’t care less for S&P and neither do most people.
The real question is whether it is USEFUL and doing so benefits the country. In Russia’s case, prosecuting MBK was clearly useful as it sent an unambiguous message to the oligarchs that their self-interested interference in state affairs would not be tolerated. It fulfilled its aim.
If the investigation of S&P is indeed political, then its primary aim would be to discredit S&P (and by implication, its downgrade of US gov’t debt). But the investigation will likely not achieve this first aim, because it is so clearly politicized. Just like Italy raiding the agencies’ offices won’t make its bonds cheaper. To the contrary, if anything. And as this investigation will be useless or even counter-productive, it is clearly not the same as MBK’s prosecution, which was useful for the Russian state.
Meanwhile, perhaps we might pause to consider the fact that S&P was simply and egregiously wrong, twice, and that the it’s better not to wait for the third strike.
So you mean to say that if you get things wrong, you’re not allowed to open your mouth again? Thanks for confirming, for the umpteenth time, your authoritarian mentality.
Comment by Sublime Oblivion — August 25, 2011 @ 5:02 pm
Phobie’s gonna be the first one the Jamestown Foundation kicks to the curb when the banksters cut their funding.
Comment by Mr. X — August 28, 2011 @ 1:13 am