Eurocrisis And Common Sense Essay

4179 WordsFeb 5, 201217 Pages
Dr. Alessandro Politi www.europeancommongoods.org What does this crisis mean? In times of emergency clarity of analysis and purpose is of paramount importance, especially when public leadership is so mediocre. In this first piece we will look first at the analysis framework at global level. Forget about the markets. This is just a misleading shorthand expression that obscures a simple fact. The OECD has observed that, after decades of M&A, during this year 9 major economic actors control beyond 90% of the derivatives market (i.e. CDS, CDO, exchange rate swaps). They are: J.P Morgan, Bank of America-Merrill Lynch, Citibank, Goldman Sachs, HSBC USA; Deutsche Bank, UBS, Credit Suisse, BNP-Paribas. This is an oligopolistic market where small stakeholders are just cannon fodder and governments have generally no sufficient financial muscle. These are the entities that make the market and break national financial reputations, economic fundamentals notwithstanding. As everybody knows there are just three international rating agencies and one national: Moody’s, Standard&Poor’s, Fitch; and the Chinese Dagong. Only a fool can imagine that these agencies and these nine global financial actors do not have significant interactions according to interests that are neither neutral nor transparent. The three Western rating agencies are called also the three sisters and they manage 85% of the market in what analysts like Frank Partnoy has called it a shared monopoly. The remaining 15% is the purview of Canadian, Cypriot and Japanese rating agencies. Objective reporting and evaluating may happen for minor issues, but for the important ones it is well-nigh impossible, because the controlled companies are paying the controlling rating agencies. This is why the Chinese government has decided to create its own rating agency and has started fortifying its

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