Junk Europe
In a matter of days Hungary becomes the new princess of Europe, taking over the rotating EU presidency from Belgium. As Reuters reports, Moody’s credit rating agency downgraded Hungarian sovereign debt to near junk status from Baa1 to Baa3. Fitch Rating, (the second of the top-three global credit raters, together with Moody’s and Standard & Poor’s) also signaled it would lower Hungary’s credit rating to the edge of ‘junk debt status’.
According to the BBC, these new assessment come as a consequence of measures taken by the Hungarian Parliament itself–the aim of cutting the deficit in order to put it in line with the EU’s fiscal requirements–will likely have the reverse effect, sending the country on an unsustainable fiscal path.
As if by financial affinity, Hungary will take over the EU presidency from Belgium, who held the rotating post from July 2010 has, its own political challenges The Belgian political blocks have not succeeded in forming a viable and enduring government since 2007. In the latest round, Belgium has been entirely without a government since April, when the most recent coalition collapsed.
As a consequence, Standard & Poor’s, based in the US, lowered its outlook on Belgium’s credit from ‘stable‘ to ‘negative‘ and warned that the credit rating would be further cut within 6 months, if the government crisis were not resolved and measure not taken to address its relatively high public debt.
These events, are linked to what has come to be known as Europe’s ‘sovereign debt crisis’. It refers to the structural and actual changes that have led to the financial crises in Greece, and more recently, the looming situations in Spain and Portugal.
‘Sovereign debt’ of course refers ostensibly to the debt held by a sovereign. It is of course remarkable enough that in the modern age. The concept of ‘public credit’, coined near the close of the 18th century in conjunction with the birth of new nation states, most notably the U.S. and France, for whom the debt of the state was no longer embodied in a sovereign person, but rather belonged to the public domain. The credit of the state henceforth belonged to the people.
And yet there is something again new and disconcerting in the way the notion of the ‘sovereign debt’ is playing out in our days. The term no longer only refers to the debt of the sovereign state. There is also new twist in the sovereignty of debt itself. Debt itself has become a sovereign. It is not simply that debt is an issue for a sovereign body. It is that debt is gradually morphing into a new kind sovereign, grounded in a cultural of global finance, a liberal market rationality, and represented in the IMF and other global financial entities, shaped and guided by the national financial rationality of the troika Moody’s, Fitch and Standard & Poor’s .
Anthropologist long ago understood that the nation is no longer identical to the nation state (if it ever was). A financial anthropology would surely point out that the debt of the sovereign is something different than the sovereign debt, living a political and financial life of its own.
