The Three Horsemen of the Apocalypse

"And I looked, and beheld a pale horse, and the name that sat on him was Death, and Hell followed with him" (Book of Revelations 6:8)

There are many horrors that keep little children awake; the monsters under the bed, the bogeyman or images of the Chuckle Brothers. My own personal tormentor was Struwwelpeter, a series of stories in which various protagonists are punished for their petty misdemeanours in a horrifically disproportionate manner. For years it gave me sleepless nights and an unhealthy fear of tailors, however I digress. But as teenagers and adults, our irrational fears of the petty and the unknown are replaced by something more tangible... something more real.

For economists, elected representative and stockbrokers, this one graph represents every monster under the bed, every bogeyman and every Struwwelpeter that they can image. On 6th May 2010, the Dow Jones Industrial Average Index dropped a staggering 9.2%, without a single identifiable reason. This news barely reached our shores due to the General Election, but had most American commentators reaching for their Valium. The consequences could have be dire; a system based on the confidence of investors could have reacted irrationally and began panic-selling their stock, which in turn may have sent one of the oldest and most respected financial institutions into economic meltdown. Many economic commentators have insisted that this stock market 'shock' was due to a perfect storm of economic variables that aligned to create the biggest single day drop in the Dow Jones' history; a mixture of 'Fat Finger Trade', exchange rate issues, insider trading, the large purchase of put options and the financial crisis in Greece.

The Greek financial crisis is possibly the most interesting and significant of these economic variables. There is no doubt that the Greek economy has been build on very weak and unstable foundations; in which the Government was receiving less in tax receipts than it was spending in the public sector, additionally the current strength of the Euro significantly exasperated the situation. However, the crisis was intensified by the international credit rating agencies Standard & Poor's, Moody's and Fitch Ratings negatively re-evaluating the credit worthiness of the Greek economy. The impact was devastating on the Greek economy and questions are now raised concerning other European economies. However, questions need to be asked about these credit rating agencies - how can these undemocratic institutions exert so much power and influence over international affairs?

Surely it is a huge conflict of interests that the companies, institutions, governments, hedge funds and investors that pay these credit rating agencies to evaluate the economies of various countries are the same companies, etc that benefit if Standard & Poor's, Moody's and Fitch Ratings devalue a credit rating since they can charge a higher APR. They are masquerading as an independent advice support system that enables their clients to make informed choices for their investments; but in actuality they are acting as hunters, killing off weak prey for investment vultures to feed on the carcasses of the nearly dead. There are many examples of these credit rating agencies threatening to downgrade a country's credit worthiness for no apparent reason, costing a country millions, if not billions, in higher interest charges.

Given the economic crisis of the past few years there needs to be a significant re-evaluation of global economic priorities - no longer should companies like Standard & Poor's be able to act with impunity, there must be stricter regulations on all financial systems in which short-term financial gambling and market manipulation can not prosper. Furthermore, the needs to be a clear delineation between Governments, financial regulatory institutions and the private sector, otherwise we are doomed to repeat the same mistakes of the past, and next time the consequences maybe worse than a deep recession.