The euro zon
Don't break open the champagne just yet. This week, the credit ratings agency Fitch promoted Spain up one level to its A grade, praising what it called the country's “strong, relatively broad-based, economic recovery”. The upward revision constitutes a positive take on the medium-term economic impact on Spain of the Catalonia crisis - assuming, that is, that we take any notice of it whatsoever.
Fitch's upgrading of the Spanish economy puts Spain in the A grade for the first time since 2012, when the country was sunk in recession; it is also the first promotion for Spain from one of the “big three” ratings agencies - Fitch, Moody's and Standard & Poor's - for over two years.
The ratings agencies' categorisations of economies and asset classes are aimed at businesses and governments and are intended to indicate how risky an investment is. The fact that Spain now occupies Fitch's A grade tells us that the agency doesn't think the Catalonia crisis has affected Spain's status as a borrower or as an investment destination. Indeed, since events exploded in the north-easterly region on 1 October last year, Spain's economy hasn't flinched, posting GDP expansion of 3.2% in 2017.
Fitch's promotion is only good news, though, if you trust a word of what the big ratings agencies say anymore. We should not forget their role in causing the American subprime mortgage crisis of 2007 and the global meltdown that followed - a topic explored in the fascinating 2010 book The Big Short by Michael Lewis, and the film version that followed in 2015.
Fitch, Moody's and Standard & Poor's gave triple-A ratings to toxic subprime mortgages, most of which had been demoted to “junk” status by 2010. The international ripples of the subprime crisis caused the worst global recession since the 1930s, now known as the Great Recession. Part of this worldwide meltdown was the European debt crisis, which in turn led to the collapse of Spain's banking sector.
Nominally at least, two of the three big ratings agencies have been held to account for their role in causing the Great Recession.
This time last year, Moody's agreed to pay out $864 million to federal states and the US justice department over its role in the crisis; and in 2015 Standard & Poor's paid a $1.38 billion penalty to settle over the same charges.
It's another question, though, whether the reputation of the big three has ever recovered - or rather deserves to be cleared - from their behaviour ten years ago.
On this point, I am grateful to a SUR in English reader for emailing me last autumn in response to a column I had just written about the ratings agencies. This gentleman heartily recommended Michael Lewis's book to me, before succinctly expressing his own take on Fitch, Moody's and Standard & Poor's: “Crooks whose opinions nobody can take seriously.”