YOU RATE IT
Neither poor, nor standard!
Kind of blue
The Berlin wall has practically been erased from the city today, and strangely enough we cannot help but to feel nostalgic about it, we miss the wall in a kind of way! At least back then – before it fell- the world could be explained through its presence, the iron curtain, the world divided in Berlin between east and west, architecture at the middle of it, playing its most crucial ideological function: division. No matter how wrong you were in supporting the wrong side of the wall, at least you knew that in the worst case you could switch bands if you felt betrayed (at least secretly). Best of all, you could be wrong, but you could not never be lost!
Right after the fall of the wall, politics are no longer at the forefront of countries destinies; market dynamics and its tensions havereplaced the old confrontations and impulses of the oldsuperpowers. No more east vs west not even south vs north. The world is readas a homogenous array of nation states; countries are not permanently divided between “goods “or “bads”. The world is understood through the lens of numbers overlaid with geography no longer affected by political signs.Markets sensitivities have become the main theme of the discussions in the city. Not long ago these discussions were merely based on the performance of the stock exchanges or the value of foreign currencies.But lately the most influential gossip of the town is the upgrading and fall of the countries on theworld rating system.
Returning quickly to the start, are Rating Agencies our new superpowers to be blamed for the tensions?Perhaps they are not like countries, but they could resemblewhat political lobbies were for the politics of the recent past;In both casestheir campaigns are means to promote or degrade a certain view of the world according to their ideology that differentiate what is good from evil.The main difference between political lobbies and Rating Agencies is that political lobbiescampaign openlyand negotiate privately to achievesuch goalswhile Rating Agencies research privately and their final judgments are not meant to be negotiable, thus are meant to be without politics.Is that believable? OK, the question is not only about finding how trustable and unbiased are the Rating Agencies judgments, but on realizing who and why gave them so much power? Who actually pays them when they rate countries without being requested to obtain their services? And if you did request to be rated, can you claim neutrality of judgementwhen a payment is pending to be transferred?
Back to School
In the geography of the world, rating agencies emerge from the U.S. context, they have actually been there for a while (since the railway expansion to the west in the XIX Century).Specially the two most important agencies: Standards and Poor and Moody’s have a long long history. But it is only since the 90’s that their expansion to the world accelerated at a 25% growth per year that coincides nicely with the fall of the wall. Their epicenter located in Manhattanexpanded their branch offices to Japan and Europe in the 80’s whileits current netspreads now over many countries.Yet their spatial presence in Costa Rica, Guatemala or out of the global webcities such asKolkata inIndia point out to their increasing need for outsourcing data processing.In any case the presence of offices worldwide has meant that more and more countries are being rated as well.
Rating agents meanwhile operate as fast as the revolutionary forces of North Africa – via virtual social networks and apps that create opinions in the investors minds, eventually leading through Downgrade News to skyrocket countries interest rates, escalate their debt, or lead theircurrency to devaluation in a matter of minutes.
The Obedient World
It is worth to notice that in average, despite all the stressful news we are confronted on a daily basis (or perhaps because of that?), the average inhabitant of the world is actually rated within the A domain and actuallyits average rating improved after the crisisof 2008 in overall.However, you could also read thatcountries are more than they ever were in the history obedientto the orthodoxies of responsible financial management dictated from the epicenter of panic, NY (nevermind the Washington consensus). While most of the countries have become perfectly capable of respecting their financial obligations, to give a step in the wrong direction could cost a country several steps of punishment, which are then reflected in higher costs of borrowing, higher amount of debt, tougher payment conditions and ultimately loss of soverinty over political decisions to control their internal budgets. Spain and Greeceare the latest EXEMPLARY cases that show to the world that No Oneis safe from their judgemental power.
At any rate, but rate me
But why is so critical to be rated? To start with, without a rating record, countries and companies cannot obtain credit in many financial institutions, especially in the U.S. A good rating for a country meanwhile could improve its negotiation capacities for acquiring credit at fair rates. The absence or negative outlook on the other hand could mean that borrowing costs escalate in accordance to the rating reports. That is why countries are proud to show the triple assessment of the experts to calm any source of alarm for potential investors. That is why the new world club of being rated is so important to attract foreign capital and be able to access credit.
The rating agencies have a protected status within the U.S. and therefore have no responsibilities on the damages they could cause to companies or countries for inaccurate ratings. To achieve this status has meant that only 3 rating agencies dominate the rating world: Standards and Poor (S&P), Moody’s and Fitch Ratings. The ratings themselves are only opinions of the mentioned companies intended to informinvestors on the willingness and capacity of a country or companies to honortheir debts and interests payments on time.
Myth and Power of the Rating Agencies
It is not that we expect Rating Agencies to be perfect, or neutral. But why don’t at least expect from our governments to monitor themmore strictly?Rating judgments do include a high degree of political judgement on which type of government is more likely to honor its debts. Their rating methods are hardly transparent in this regard and rely upon gossips heard at world summits, the rating agencies rely on rating agents much as secret agents of the past.
So crucial are their ‘opinions’ that billions of euros -and more absurdly millions of people-depends on their fair judgment,just as millions of people depended on the judgment of a dozens of lunatics before the fall of the iron wall.
An allegorical play
Yearning for understanding the current world through architecture we want to make an allegory of the role of the Rating Agencies in our current time. So when we walked inside the HKW we encountered a place that is the most functionalist space of all, the wardrobe. This space could be read like a biomachine operated by few humans that are in charge of putting the clothes of hundreds of visitors in order and in custody simultaneously. When a visitor enters he/she takes his/her coat out and puts it on the impressive and elegant counter of the wardrobe. Despite the fact that the wardrobe and its users are at opposite sides of the counter we are not talking of a confrontation or a competition, it is not A vs B but more like A / X in which A (the wardrobe) plays the role of distributor, / is the counter and X (the users). Users accept the role of / to inspect their belongings and they don’t have more options but to trust A in how their belongings will be arranged.
Human models do a catwalk performance wearing the world country flags. Their performance reflects on the research about how countries are eager to obtain a good rate, how others ignore that they are being rated. Faces and body movement contribute to accentuate their position. The performance is filmed and then displayed in screens in the back of the counter of the wardrobe.
The flags used by the models are arranged in the wardrobe by their rating scores: AAA+, AA, BB, CC, D
The 3 main clusters of S&P are grouped by the 3 first letters:
AAA/AA/A = Extremely Strong / Very Strong / Strong capacity to meet its financial commitments.
BBB/BB/B= Adequate / Less Vulnerable / More vulnerable. Adverse economic conditions might or will likely impair the capacity to meet its financial commitments.
CCC/CC/C= Currently vulnerable / Highly vulnerable / Regulators might have the power to favour one class of obligations over others.
Fight, Andrew.The Ratings Game. John Wiley & Sons, LTD. 2001. ©
Sebastian Marsiglia, Marcela Martin, Kathia Sanchez, Andres Sandoval, Max Zolkwer, Pablo Zolkwer
ZuzannaKoltowska, Felix Madrazo, Teresa Papachristou
Juan Pablo Corvalan, Renata Sinkevic, Gabriel Vergara, Elaine Hoffman
Raphael Letoux Lungo
Models in order of appearance:
katie van Hemelrijck
Tamara de Halleux
Melissa Diaz Paniagua
Anita Cools, Anne de Goes
Make up models:
Dress design& Production:
Anita Cools, Teresa Papachristou
Studio 38. Rue du Moulin 38, Brussels