Yet another example of economics attempting to dictate its particular ideology to the political process. The same thing happened during the last mayoral race in Ottawa. Standard and Poor’s [4] downgraded the City’s credit because the increased debt ratio resulting from the proposed light rail project “concerned” them. The local media framed this to the effect that “If Alex Munter is elected, our credit rating will surely continue to decrease”, since Munter was leading the pack at the time. O’Brien, the only candidate to oppose the light rail project outright, “won” the election, and S&P swiftly returned Ottawa’s rating to AAA. The stranglehold that credit rating agencies have on political entities is ridiculously brutal, since it does actually threaten fiscal integrity in the form of reduced investment and lower bond pricing. What makes me even more frustrated is that in the article you are talking about, they cite two very specific aspects of “problematic” government spending: healthcare and social security. Why not reduce the U.S. credit rating for their soaring military expenditures or improper regulation of the financial industry that is going to lead to a Wall St. bailout? As Troy so aptly puts it in another post - when will we stop listening to these agencies who quite obviously make the most arbitrary, self-benefiting decisions, veiled only by a thin layer of economic jargon?

However, it’s important to remember that the credit agencies are also ‘political’ entities and these governments are ‘economic’. These two terms are not clearly defined and difficult to apply because they the empirical world refuses to conform to analytical terms. That is why the recent academic return to talking about ‘political economy’ is so exciting. However, it should not begin from the perspective of an initial distinction between the ‘economic and the ‘political’ but rather, with a recognition that no distinction can ever be legitimately identified. Theories should be grounded precisely in the ‘political economic’ character of the institutions to which it is meant to apply

Of course; I was merely taking some polemical liberty in phrasing it so distinctly. What I meant was captured more by the final sentence: that here is an entity that constructs itself as an objective agency without interests, that merely is the vassal for economic laws to be carried out. In reality, S&P and Moody’s are thoroughly political entities mitigating power relations, of which economic relations are only a segment. As I’m sure you well know, all actors are simultaneously political and economic because they belong to a social totality.
Though be wary about characterizing “political economy” as one single defined way - many practitioners (i.e.: neoliberal) of political economy start from the premise that two distinct spheres of social life are merely convoluted and need to be disaggregated. Furthermore, ‘political economic’ is a highly contested term within the discipline - and many people who hold graduate degrees in the subject still struggle with just what the term means! Certainly in the spirit of my post, and I think in yours, the critique and exposure of those who claim to be apolitical is an important part of ‘political economy’. But this is merely a contemporary branch of Marxist political economy that is engaged in a critique of ideology (or a Gramscian ‘war of position’ if you prefer).

It is time to test the credibility of rating company. Do they lower rating when the trouble is big countris? Do they consider the national interest?.
When a developing country is on troble, they instantly downgrade the rating. Let we wait if thei fair or not.

It certainly is a vicious cycle that the credit rating agencies are engaged in. You need a good credit rating to get investment, but without capital, you can’t get a good rating! One thing I’ve always wondered is who rates the credit rating agencies? Obviously not their competitors!