The Moody’s downgrade: how Labour should react
I hage argued on twitter tonight, with Danny Blanchflower and others, that Labour/the left should forego the short-term pleasure of goading Osborne over the Moody’s downgrade, and simply stick to the key point that Credit Rating Agencies are part of the problem and should be ignored.
The counter-argument is that Osborne set maintaining AAA status as his ‘no.1 benchmark’ and that he should be held to account againmst his own criterion for success.
I can see the argument, but I disagree. It will be much more effective long-term to disrespect Moody’s judgment, and say it is an irrelevance, as this creates a continuity as and when Labour needs to get into an aggressive, economy-saving fiscal expansion post-2015 and the cretinous, austerity-crazed credit rating agencies get touchy about it.
This is actually an important moment. I hope Labour HQ has gone over the scenario, and gets its response right, in a way which avoids it being hoist by its own petard in 2016.
Sadly, I don’t hold out much hope.
Update 23/02/13: Ed Balls got his first official reaction half right, with the starting caveat to his attack on Osborne:
It would be a big mistake to get carried away with what Moody’s or any other credit rating agency says. Tonight’s verdict does not change the fact that the credit rating agencies have made major misjudgements over recent years, not least in giving top ratings to US sub-prime mortgages before the global financial crash.