2. Their rating can make or break even big corporations. A huge European corporation finds itself unable to invest for fear that it would be downgraded and its shares would plunge. The losses would run into hundreds of millions.
3. Perhaps the rating agencies were only doing their job – letting the investing public know the situation the corporations are in. But they can be wrong or they can be influenced.
5. On the other hand European leaders are reported by Financial Times to be angry with rating agencies for their role in Europe’s debt crisis. They and the United States are now calling for tough measures to curb their influence over markets.
6. These are cherished institutions in the Western financial and business systems. So we must have them as well. And so we do.
7. But like all the systems and institutions conceived by the rich western countries, they are far from perfect. If we must follow them, we should be more circumspect. Rating agencies wield power and as they say power corrupts. We should take their ratings with a grain of salt. We must be told the real basis for their ratings. Otherwise we may suffer the same fate as the European and the Americans.