RATING EUROPE

So moves have begun to create a rating agency in Europe to balance against the US top three - Fitch, S&P and Moody's.

As I wrote in the last Financial Risks Today, there has been a lot of anger against these agencies but at the end of the day, I honestly believe that if you just go on what an agency says and you fail to do your own due dililgence then, ultimately, it is your own fault.

Yes, there are issues over conflict of interest but does anyone honestly know a better way of payment?

Bizarrely, it can be claimed that the introduction of Fitch created the competitive environment that resulted in the agencies possibly giving kinder ratings than they should have.

Yet competition is the answer?

Yes, the agencies made errors, which the fully accept, but will the creation of a European agency help and will it be truly independent?

I hope so and to answer my own question - competition is healthy, as long as it keeps the competitors honest.