Rating agencies: wrong again. The Netherlands do not deserve a triple A rating.

from Merijn Knibbe

According to Fitch, S&P and Moody’s, rating agencies, the Netherlands still deserve a triple A rating (or in the case of Moody’s the equivalent Aaa P-1 rating). They are wrong. A country:

* which has one of the highest mortgage debt levels (%GDP) of the world

* where real house prices (including sales tax, which went down from 6 to 2%) have already declined with close to 20% and where real turnover on the housing market declined 60%

* where house prices are forecast to drop further

* where unemployment is increasing

* where real incomes are declining

* where banks increase mortgage interest rates

* where the economy experiences a rather severe downturn

and which has a large and in some cases feeble banking sector just does not deserve a ‘triple A’ rating. A massive capital injection in the banking system can not be excluded. So, the rating agencies are wrong. Again. See this 2006 article about the moral hazard and protected status which these agencies face, how this influenced their decisions for the worse and why little could be done to counteract this. Rating agencies – you can’t rely on them. And they should have known.

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