Sovereign credit ratings... according to non-Anglosaxons

Specifically, according to Chinese company Dagong Global Credit Rating.

It is not trivial, considering that Anglosaxon companies may have a bias and that China, along with other East Asian countries like Japan, is a major investor in foreign debt.

Definitively the USA, Britain and other major Western countries like France, or even Germany, are not AAA for the Chinese financial watchdog. Notably the USA is rated as merely AA in both local and foreign currency with a negative outlook.

For reference, I must remind that the rating of AAA- of Spain by Standard and Poor caused hysterical reactions from the corporations and the politicians, both locally and at EU level.

Let's see the detail (major powers in bold type)

States that get AAA rating are Norway, Denmark, Luxemburg, Switzerland and Singapore. Australia and New Zealand also get this rating in their local currencies but only AA+ in foreign denominations.

AA+ is achieved by Canada, Netherlands, Germany and China. China also gets AAA in foreign denominations.

AA rating is given to Saudi Arabia and the USA, however the superpower gets a "negative" remark on its outlook.

AA- is obtained by South Korea, Japan, Great Britain and France. Japan however gets a full AA, without the minus, for credit denominated in foreign currencies. Japan, Britain and France get a "negative outlook" remark as well.

A+ is reserved for Belgium and Chile.

A is given to South Africa, Malaysia, Russia, Estonia, Poland and Spain. Poland gets an A- in foreign currency rating. Spain is the only in this bloc with the "negative outlook" remark.

A- includes important countries like Brazil and Italy, as well as Israel and Portugal. Israel credit looks weak but as long as it can get its yearly tribute from Washington guess it'll survive. Italy and Portugal however get the "negative outlook" remark.

BBB includes India, Thailand, Mexico, UAE, Kazakhstan and Hungary. The last two with BBB- in foreign currencies. Hungary and UAE get a "negative outlook" remark.

The category BBB- for both types of bonds is reserved to Indonesia.

BB+ includes Egypt, Venezuela, Nigeria and Romania, this last with a "negative outlook" remark.

A BB ranking is obtained by Greece, Turkey and Iceland. Iceland being the only one with the "negative outlook" remark in this group.

Vietnam gets a BB-, Mongolia and Philippines a B+, Argentine and Ukraine a B, Pakistan B- with "negative outlook" and Ecuador is ranked as CCC, the lowest of all surveyed countries.

The ratings are based on a number of factors, which are fulfilled only by the AAA rated countries:

... political institutions are mature and well-functioning; national development strategies are clear and implemented vigorously with obvious effect; the national security situation is stable; economic strength is strong, and they have powerful global competitive advantage; as the world economic recovery, their growth prospects are assured; they have well-developed financial systems and strong resistance to impacts; the Government maintains a stable fiscal records in long term; although the economic crisis yields the government deficit and debt increasing, the fiscal sustainability are maintained; the internal value of currency is stable; their debts are mainly denominated in local currency, or they have good external liquidity and ample foreign exchanges; the external value of the currency is stable.

Countries rated AA are considered less stable lacking one or two of these ideal components, what makes their solvency somewhat less guaranteed. States ranked A are only strong in two or three of these elements, etc.

The report also includes a comparison with Western rating agencies that makes evident that the Chinese agency is more demanding in order to give an AAA rating but compensate that by giving more AA and A ratings. B and lower segment ratings are similar.

Dagong rates several developing countries higher than its Western equivalents. Of course, one of them is China but also includes Saudi Arabia, Russia, Brazil, India, Indonesia, Nigeria, Venezuela and Argentina. Go BRIC, go! or are the Chinese more objective when rating the developing world?

They argue that:

Dagong holds that the national management capacity of these countries continues to improve, the economic growth potential is stable in the long term, fiscal stability and the resistance capacity against external shocks are getting better increasingly. Especially after the global financial crisis, the performance of these countries prove that they are more likely to turn the disadvantage into advantage in a short time, which could ensure the increase of national credit level.

What seems to make some good sense on light of what we have seen in the news in the last years.

In turn there are 18 countries getting lower ratings by Dagong than the usual NYC-based watchdogs. Of these, more than half are developed Western countries: Canada, the USA, a large list of European states and Israel. There's also a meaningful group of developing countries (UAE, Thailand, Mexico, Romania, Philippines and Ecuador) but these only rank one level lower, while the developed countries of Europe and North America see often their credit rankings reduced by several levels.

Chinese or Western bias? Considering the panic that they are inducing through the media over here about credit issues, I'd say that Western bias looks more likely. However can you trust the media these days?

The Chinese raters argue that:

As a result of the discordance among the growth rate of government debt, the growth rate of the economic output, and that of the fiscal revenue, this group of countries can only maintain their sovereign credit level on the basis of external financing. Since the beginning of 2010, fiscal risks in these countries have not only become the biggest source of systemic risk domestically, but also possibly the main source of the risk of a double dip for the world economy.

There's also a long list of 23 states that get similar ratings by all four companies.


Sources:

• Dagong International Credit Company, Sovereign Credit Rating Report of 50 Countries in 2010 (PDF)
• Al Jazeera Business Blog

News on the human shields against the High Speed Train

This is the continuation of the info I posted last week on four activists entering abandoned mines with the intention of becoming human shields against the destructive, undemocratic, useless and extremely costly Basque High Speed Train, that is being built in the Western Basque Country.

The information was not being actualized properly at the AHT Gelditu site, I think (at least not when I checked), but now there are several news items.

I now reckon that the people giving the press release, some of which I identified, were not the same ones going to the mines.

Whatever the case, the news are:

The Government and its companies have continued work as if nothing happened. Explosions continued on thrusday and friday and it's reported that the activists felt rocks falling, though they are alive so far. This criminal attitude triggered that a legal denounce has been placed at court.

Two of the activists chained to each other through a cement filled barrel to make forced evacuation more difficult.

Another problem they are reporting is that the mines have high humidity levels, what makes their stance very uncomfortable and unhealthy. In fact unspecified health problems have been reported.

Demo in Ordizia.
The banner reads: 'Through disobedience until the High Speed Train (AHT) is stopped. Resistance in the mines of Itsasondo'.

There was an important demonstration at Ordizia on Saturday (photo above).

As police did absolutely nothing, the AHT Gelditu platform sent a group to check for the situation of the activists, which are alive but with the important caveats mentioned above that imply serious danger for their lives and health.

Contact group wading through the mine galleries

Finally today, police has shown up at the site and it is speculated that their intention is to take them out.

___________________

Update (July 6): the four activists were finally expelled from the mines yesterday evening, reports Gara. After passing through the health center, they were arrested and charged with "public disorder, resistance and disobedience to authority".

Risking their lives to stop the High Speed Train

Four people have become human shields to stop the Basque High Speed Train (AHT-TAV) work. The four ecologists have entered an abandoned mine at Itsasondo in the Gipuzkoan highlands near where the development companies are carrying on prospections by means of continuous explosions, which could destroy the old mine nearby at any time.


Above: the four nonviolent activists at the press conference where they announced their action. I am quite sure. in spite of the low quality of the pic and the lack of names in the source, I know personally one of them (Jaxo, the second from the right) and probably all four. No big surprise: this is a really small country. Guess I'll feel emotionally obligued to go to demo this Sunday.

And sure: I feel even more worried.


The High Speed Train is a waste

Not only it is enviromentally hostile, it is a total waste: a bottomless pit for public money and a relevant factor in the public deficit that so problematic has become.

It is not me who says that, it is a big business speaker: the president of the Spanish Association of Spanish Concessions of Highways, Tunnels, Bridges and Toll Roads (ASETA), José Luis Feito declared yesterday at a major university that this type of train is useless for the low population density and rugged orography of Spain, that the existing trains (between Seville, Madrid and Barcelona) can't pay even the 30% of the costs. To offset this, he admits, the ticket price would have to be at least tripled but that would mean that nearly nobody would use them.

He instead proposes to build freight railroads, which are almost non-existent in Spain, what means that most cargo traffic goes by road, crippling them.

He acknowledged that the high speed trains in Spain are one of the causes of the growing public deficit and proposed that something will have to be done about it.


5000 euros of debt to every Western Basque

The Basque High Speed Train is projected to cost 4900 euros to each Western Basque citizen. And as the Spanish government has, in an unprecedented act of pragmatism, removed its support for the Basque HST, that means we are going to have to pay that in full (Southern Basque territories are semi-autonomous in tax collection and allocation - it has been that way since the Castilian invasions of 1199 and 1512, except partially for the fascist interlude).

For that reason there is now a campaign going on to stamp or write down on the bank notes a short message denouncing the unduly high cost that the HST is having for us. This major financial argument may possibly persuade the indifferent after all because everybody knows how hard is to gather those 4900 euros.

Around the Web: Palestine Genocide goes on

Lots of news and analysis. Can only make a short mention of some of them:

Genocide by thirst: Israeli authorities block a French water purification system for Gaza and force it back to Marseilles (from Sabbah's Blog). Water is one of the main problems faced in Gaza right now.

Genocide by starvation: the destruction of farmland in overcrowded Gaza strip is dramatically increasing the hunger in the open air prision (from Annie's letters).

Widespread and disabling torture in the West Bank (by the forces of kappo Abu Abbas) financed by British (found at Sabbah's Blog and Filasteen, originally from the Daily Mail).

Spain will ammend the War Crimes' Law after several Israelis are charged (found at Palestine Free Voice).

Also, Joachim Martillo argues that Israel is nothing but another Ponzi Scheme. Such a tiny country with such a limited economy can't really afford the payments of its huge foreign debt and that, if massive direct aid would stop flowing from the USA, Israel would just collapse in a matter of days.

And there's also some info at Palestine Video on the important gas reserves offshore of Gaza, surely one of the elements behind the genocide.

The complicity with the criminals is all around us. Can we make it stop, can we make it reversed into zero tolerance, into active boycott for the most racist regime of our times? We can at least try, we must try.

If not you, who? If not now, when?
.

Ecuador denounces its foreign debt

President Correa gave the order not to pay the interest of some of its $10 billion international debt, that he considers "immoral and illegitimate". It is the first Latin American country to do so in many decades (others have defaulted or put limits to interest payements but none had bluntly denounced the illegitimacy of the international debt so far). He says his cabinet will soon propose a system to renegotiate the debt in "reasonable" terms and denounced the international lenders as "monsters".

This is, I understand, a major yet expected step (I have been reading forecasts for scenarios like this since the 1980s) that will no doubt put more strain in the already weak global financial system. The BBC article suggests that this would put strain on Ecuador's finances but actually I guess that the economist that is Rafael Correa is probably thinking rather in alleviaing them.

As has been denounced once and again, most of the transnational debt held by poor countries has neven been of any help to them but rather has fed the pockets of some corrup leaders, while it is the taxpayer who is expected to put up with them.

In a more detailed account, Rebelión (in Spanish) informs that this is the outcome of the Public Credit Integral Auditing Comitee (CAIC) research, an organism created in 2007 precisely to evaluate the legitimacy of the foreign debt, chapter by chapter. The decision affects some $3.8 billion (roughly 38% of Ecuador's foreign debt) owed by the Global Bonds 2012 scheme.

The CAIC found "serious indications of illegality" in the contracts of foreign debt in general, what has brought President Correa to say that "what has been done with the debt is immoral: a treason to the fatherland, totally illegitimate". They are pondering legal action against the debt owners.

In this context, Ecuador has asked the UN for help in their effort to estabilish what parts of the foreign debt of poor nations are legiimate and which are not and to create a legal frame that regulates the debt morally. They are gathering support among the G-77 (the group of most impoverished countries) and also with China for that goal. If Correa is succesful in his international endeavours, it may mean very bad news for the international lenders, so used to impose their criteria to poor nations. It should also make corrupt loans less likely to happen, specially as they could be challenged legally.