Information Landmine

"The Americans keep telling us how successful their system is. Then they remind us not to stray too far from our hotel at night." - An un-named EU trade representative quoted during international trade talks in Denver, Colorado, 1997.

Monday, March 23, 2009

Annals of smug (continued)

There's a pretty good formula for success in the study of International Political Economy which goes roughly like this:

1) Find an economist writing about macro-economics update: pretty much anything.
2) Read until you discover said economist neglecting some really obviously predictable political event that would affect their model
3) Proceed to slate them for not sufficiently considering "the political" update: one or more of "public choice theory", "interest groups", "politics" or "the political."[1]

Over at IPEZone, Emmanuel does a great job of this, using those folks who thought that US sovereign debt might lose it's AAA status as his punching bag:

As an IPE scholar, I am inclined to believe that no amount of red ink will make the major credit rating agencies--S&P, Moody's, and Fitch's--downgrade US debt. The reasons are political-economic. With the exception of Fitch's, these are all US-based firms. When push comes to shove, they will try to protect the national interest, provided not-too-subtle nudges from Sammy. For instance, American authorities have sole discretion for classifying these entities as nationally recognized statistical rating organizations (NRSROs). If American authorities catch wind of an impending downgrade, it is child's play to kick them out of the US credit rating business entirely by removing this designation (despite these being American firms). Being disqualified to rate a significant portion of dollar-denominated debt would endanger credit rating agencies in a way that the Asian financial crisis and the credit crunch failed to do.

All of which is a roundabout way of saying that, for a politics/economics commentator, Robert Peston talks some shit sometimes.

[1] Connoisseurs of the process will undoubtedly be able to think of many more, and will also notice that the terminology here has been ranked in ascending order of the likelihood that the user doesn't think of themselves as an economist.

Updated to achieve an even more preposterous level of off-the-cuff generalizing than was previously the case.


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