The New Masters of Capital: American Bond Rating Agencies and the Politics of Creditworthiness (Cornell Studies in Political Economy) [Hardcover]

Timothy J. Sinclair (Author)

Book Description

Series: Cornell Studies in Political Economy | Publication Date: April 2005

In The New Masters of Capital, Timothy J. Sinclair examines a key aspect of the global economy—the rating agencies. In the global economy, trust is formalized in the daily operations of such firms as Moody’s and Standard & Poor’s, which continuously monitor the financial health of bond-issuers ranging from private corporations to local and national governments. Their judgments affect unimaginably large sums, approximately $30 trillion in outstanding debt issues, according to a recent Moody’s estimate. The difference between an AA and a BB rating may cost millions of dollars in interest payments or determine if a corporation or government can even issue bonds

Without bond rating agencies, there would be no standard means to compare risks in the global economy, and international investment would be problematic. Most observers assume that the agencies are neutral and scientific, and that they interpret their role in narrowly economic terms. But these agencies, by their nature, wield extraordinary power and exert massive influence over public policy. Sinclair offers a highly accessible account of these institutions, their origins, and the rating processes they use to judge creditworthiness. Illustrated with a wide range of cases, this book offers a fresh assessment of the role of an often-overlooked institution in the dynamics of modern global capitalism.

Editorial Reviews

From the Inside Flap

"In this volume Timothy J. Sinclair systematically and thoroughly explores a major but little-known dimension of world affairs. The extensive expansion of international capital mobility in recent years has accorded bond-rating agencies a central place in the dynamics of globalization and Sinclair does a masterful job of explicating the various ways in which these new masters of capital exercise their power and perform their roles."—James N. Rosenau, University Professor of International Affairs, The George Washington University

"In The New Masters of Capital, Timothy J. Sinclair investigates the world of bond rating agencies. These private institutions have immense power, as their judgments can profoundly affect the financial conditions faced by corporations, cities, and countries. Their ratings can determine whether or not poor countries or struggling municipalities can borrow on private markets, a consideration of profound importance to their economic success. Sinclair explores how the bond rating agencies function, and how they can malfunction, as part of the broader international political economy. The New Masters of Capital will be interesting and informative for all those concerned to understand the operation of today’s global financial markets.

James Carville once famously said that when he was reincarnated he wanted to come back as the bond market, because ‘then you can intimidate everyone.’ If Carville had read Sinclair’s book, he would have chosen to come back as a bond rating agency, because then he could even intimidate the bond market!"—Jeffry A. Frieden, Stanfield Professor of International Peace, Harvard University

"Timothy J. Sinclair offers an admirably jargon-free account of bond rating agencies. This book will be widely read, as it is the first to systematically tackle this aspect of the politics of economic globalization. The New Masters of Capital makes a strong and intriguing argument about the role of power and authority in the social construction of knowledge in international market settings."—Kathleen McNamara, Georgetown University

From the Back Cover

"In this volume Timothy J. Sinclair systematically and thoroughly explores a major but little-known dimension of world affairs. The extensive expansion of international capital mobility in recent years has accorded bond-rating agencies a central place in the dynamics of globalization and Sinclair does a masterful job of explicating the various ways in which these new masters of capital exercise their power and perform their roles."--James N. Rosenau, University Professor of International Affairs, The George Washington University

"In The New Masters of Capital, Timothy J. Sinclair investigates the world of bond rating agencies. These private institutions have immense power, as their judgments can profoundly affect the financial conditions faced by corporations, cities, and countries. Their ratings can determine whether or not poor countries or struggling municipalities can borrow on private markets, a consideration of profound importance to their economic success. Sinclair explores how the bond rating agencies function, and how they can malfunction, as part of the broader international political economy. The New Masters of Capital will be interesting and informative for all those concerned to understand the operation of today's global financial markets. James Carville once famously said that when he was reincarnated he wanted to come back as the bond market, because `then you can intimidate everyone.' If Carville had read Sinclair's book, he would have chosen to come back as a bond rating agency, because then he could even intimidate the bond market!"--Jeffry A. Frieden, Stanfield Professor of International Peace, Harvard University

"Timothy J. Sinclair offers an admirably jargon-free account of bond rating agencies. This book will be widely read, as it is the first to systematically tackle this aspect of the politics of economic globalization. The New Masters of Capital makes a strong and intriguing argument about the role of power and authority in the social construction of knowledge in international market settings."--Kathleen McNamara, Georgetown University --This text refers to the Paperback edition.

See all Editorial Reviews

Product Details

• Hardcover: 200 pages
• Publisher: Cornell University Press (April 2005)
• Language: English
• ISBN-10: 0801443288
• ISBN-13: 978-0801443282
• Product Dimensions: 9.3 x 6.4 x 0.9 inches
• Shipping Weight: 1.1 pounds
• Average Customer Review: 5.0 out of 5 stars  See all reviews (1 customer review)
• Amazon Best Sellers Rank: #1,866,351 in Books (See Top 100 in Books)

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4 of 4 people found the following review helpful:

5.0 out of 5 stars A solid introduction to the power of bond rating agencies, April 30, 2007

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Rolf Dobelli "getAbstract" (Switzerland) - See all my reviews
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This review is from: The New Masters of Capital: American Bond Rating Agencies and the Politics of Creditworthiness (Cornell Studies in Political Economy) (Hardcover)

Few writers have closely examined the work of bond rating agencies - even though their decisions can move markets, open or close the doors to capital, and even bring down governments. Timothy J. Sinclair manages to keep his prose relatively accessible, despite his many references to research that could only appeal to academics. Although his detailed analysis of various sociological characterizations of agency power may be of little interest to the general reader, we believe that his main point - rating agencies exercise power and influence well beyond the bond markets - deserves careful consideration by anyone interested in economics, finance, politics or the issue of globalization.