In today’s post the focus will be on the effect of credit rating agencies in relation to national interests. A recent spate of news articles confirms that rating agencies, with respect to their output, have a demonstrable effect upon the health of a nation state’s future, in spite of analysis that suggests the actual value of their output is limited at best. In 1996, the New York Times Pulitzer-winning Journalist Thomas L. Friedman commented, now famously, that ‘ you could almost say that we live again in a two-superpower world. There is the U.S. and there is Moody’s. The U.S. can destroy a country by levelling it with bombs; Moody’s can destroy a country by downgrading its bonds ’. Whilst many have debated this notion – Professor Frank Partnoy provides a representative example of this – it is worth instead looking at the reality of the situation, rather than the theoretical landscape. To do this, there are a number of clear examples that show, rather counterintuitively, that the ...