When it comes to finance, pigs won't fly

Since the bursting of the asset bubble financiers are on a desperate quest to seek other fiddles to generate the vast incomes they have grown accustomed to. Speculating in national economies appears to be the scam of choice. The power-players are the credit-rating agencies. In a world beyond democratic politics, these self-appointed judges of the worth of whole countries have become market makers.

A downgrade in the rating of the economy of Spain from 'stable' to 'negative' as happened to Spain last week, will cause an abrupt decline in the desirability of Spanish public debt, meaning that the Spanish government will have to pay more to extend its IOUs, and have less available for public spending. This has devastating consequences of the people of Spain. The role of economic policeman once undertaken by researchers from the IMF now appears to have been privatised and passed to the men from the credit rating agencies.

These are the new harbiners of doom whose journeys to the developed economies that were beyond the reach of the IMF lead to savage cuts in public spending and the loss of the services that the vulnerable rely on. The suggestion of such a visit is itself enough to send the credibility of a country spiralling downwards, making it a self-fulfilling prophecy, since this will automatically make it more expensive for that country to borrow. These visits are not neutral fact-finding missions but examples of hostile sabotage attacks on national economies.

But for a financier it represents an opportunity to acquire arbitrage profit from the movement in the value of government stock, especially if the financier were to know which way the movement was likely to move in advance. Spain's membership of the euro means that it cannot suffer the sort of speculation against its currency that made George Soros rich on the UK's Black Wednesday, but placing bets on the movement of Spain's national bonds must be just as lucrative.

Most offensive terms of our Mediterranean neighbours have passed into the graveyard of political uncorrectness, but referring to Portuagal, Ireland, Greece and Spain as PIGS is apparently still an amusing pasttime to those in the City. Given the recent political history of these countries, their citizens have little to laugh about. Their historic battle over value between capital and labour is already showing signs of returning, and the spectre of military dictatorship may not be far behind.