One has to ask, why on earth did yet another rating agency – this time it was S&P – bother to downgrade Portugal’s debt from BBB to BBB-. OK, so now being just one mark above ‘junk’ status it does send a kind of message I suppose but then again being so far behind the market curve I can see little point in this exercise save that the name of S&P might make a few more headlines! Mentioning this would likely be the theme of my blog today to a former colleague on a crowded Jubilee line train this morning he retorted with a chuckle that as I have a particular love of Portugal that I was biased! True, I am off to Portugal for my annual vacation shortly but believe me there is far more to it than that. The real point is that with Portuguese bond yields now above 8% and no less than EUR9bn of redemptions due over the next three months markets long ago decided the fate of the Portuguese governments ability to resolve its debt situation alone is doomed.

At the same time Portuguese debt was ‘downgraded’ it seems that the rating agency people decided to take the same hammer and sickle to Greek debt bludgeoning this down to what is termed BB- from BB+ on the back of a belief that new EU bailout rules may well mean that both Greece and Ireland default on their debt obligations. Again all that can be said to this is that having pushed yields into the stratosphere markets decided some time ago that sooner or later one or other of the most troubled Eurozone nations would default on its debt. No doubt by further downgrading debt one or two notches closer to junk status will at some point encourage one of them to actually do just that!

Of course in proffering a degree of criticism on the behaviour of rating agencies we must take into account their past actions back in the good old days when, buoyed by gung-ho politicians like Gordon Brown and misguided central bankers like Alan Greenspan who thought that they could prove history wrong, left much to be desired. Back then by failing to take due cognisance of risk they [rating agencies] effectively encouraged governments, national banks, companies and individuals to borrow and spend. Clearly they have much to answer for but going too far and too fast in the other direction by downgrading virtually everything that walks particularly if reasoned partly at improving the public perception of themselves is no way to go. Still, perhaps I should know better as history not only tells us that we almost always shut the gate after the horse has bolted but that we then overreact!

That last point [overreact] is best emphasised by overregulation of the controlling authorities. To that end sooner or later over the next few weeks we will hear the full and likely torrid details of what if any impositions Sir John Vickers and his so-called Independent Banking Commission would seek to impose on our already bewildered British based banks. I fear the worst and that what Vickers will do could, if the government acquiesced, lead to the slow destruction of all that Britain has stood for and its hitherto great success and leadership of global financial markets. This will hardly be a case of ‘will the last businessman to leave England please turn out the lights’ but if allowed to run its course unhindered it could certainly be a case of ‘will the last UK headquartered bank and investment banker make sure that they hand all the keys back’.

Having said that and being in one of those moods today let me have a go at some other of our finest institutions! Yesterday or was it the previous night when the PR related embargo was finally removed at midnight the Office of National Statistics told us that in falling by 0.8% last year household incomes had suffered their biggest drop in over 30 years. Why am I and few others surprised by such news? Simply because if you have paid yourself too much for decades, made yourself so uncompetitive meaning that we have to buy in maybe 85% or more of what we consume at some point something has to give. If it isn’t your currency because of inflation and the corresponding negative hit to employment then the only thing that can happen is that wages drop beginning a gradual decline in the standard of living. It’s what happens when other countries are growing and yours is not! It is what happens when we ignore the lessons of history and try to do things on the cheap meaning casting aside our industries and buying everything in. Oh yes, I can hear the cries that say what about our brilliant service based industries that have so brilliantly taken the place of our lost manufacturing industries, what about our hugely successful banking and financial industries that have taken up the slack employing hundreds of thousands of people? All true and brilliant that each and everyone are so why then are we risking our very commercial existence by potentially pressing the self destruct button on these too?

Not content with continuing to talk house prices and whole economies down with aplomb it did not take long for those economist prophets of doom to tell us that after Japanese industrial output edged up a fraction in February only to, due to the tragic events that we unfortunately know all too well, likely collapse back in March. Thanks for nothing! A little information goes a long way so they say and I am surely not alone in thinking we get far too much!

Concluding the theme for today I turn my attentions quickly to the oil, energy and nuclear story in the wake of the Japanese earthquake, tsunami and specifically here in the UK, the imposition of a £2bn tax grab on oil companies by the Chancellor in last weeks budget. While the German government did itself few if any favours in its handling of the nuclear debate in terms of future investment the UK government had in fact behaved quite sensible in how it handled the approach. It did so in the knowledge that not only is Britain an unlikely candidate for a large earthquake and tsunami but also in the knowledge that seven of the remaining eight nuclear power stations in Britain are of the advanced gas cooled (AGR) type. The exception is Sizewell B which is a pressurised water reactor (PWR) type. Meanwhile we read with some regret today that Deputy Prime Minister Nick Clegg has apparently suggested that the plan instigated by the previous government and that has subsequently been backed by the present government for the building of additional nuclear facilities may, following the incident in Japan, stumble at the very first hurdle. I make no judgement on the nuclear issue here but for the purpose of this exercise the point is not whether the long held political view of Mr. Clegg and the Lib-Dem party that no further nuclear power stations should be built is right or wrong but that a senior coalition cabinet minister has once again broken ranks. On the subject of oil and the £2bn budget grab we have already seen the Norwegian group Statoil say that it is as a direct result of last weeks budget planning to put two separate North Sea related oil and gas projects on ice. So be it but what’s the betting that if oil and gas prices keep going up they will soon be seeking to melt that ice.