Does it matter if Britain loses its triple-A credit rating? The opinion of the undemocratic ratings agencies is worthless

The Golden Latrine has sympathy for Greece. Although my overdraft doesn't quite yet run to the hundreds of billions, the pain of unpayable debt is something that is all too familiar to most of us.

News percolated through last night that the credit ratings agency Moody's has warned that Britain may have its AAA status downgraded. In laymen's terms, these agencies grade the security of debt i.e. how likely a lender is to be able to pay the money back, AAA being the most secure. Put simply, a downgrade would mean that in theory it was more expensive for the British government to borrow money. Last month France lost its AAA status and eight other Eurozone countries had their status downgraded in this way.

Britain hasn't been downgraded, or even put on "negative watch" (which implies there is a 50% chance of being downgraded within two years), but rather on "negative outlook" which suggests only about a one in three chance of a downgrade in the next year or two.

Nevertheless, this is news that will have the chancellor's heart (if George Osborne has one) aflutter and raise alarm in the City, but the average person will shrug over and carry on with their day. And you know what, the average person would be right.

These are the ratings agencies, after all, that completely failed to spot the 2008 global economic crash and, more amusingly given their pronouncements from on-high about the creditworthiness of the Eurozone economies, the Greek debt crisis. As the brilliant Aditya Chakrabortty pointed out recently, Moody's report on Greece in December 2009, six months before the country had to be bailed out by their Eurozone partners to the tune of $147bn, was entitled "Investor fears over Greek government liquidity misplaced." In other words: everything fine here, nothing to see.

The stark fact is that global finance has reached the stage where it is simply too complex to be properly comprehended. As screenwriter William Goldman said of Hollywood: "Nobody knows anything.”

And don't just take my rabidly liberal, frothing-at-the-mouth word for it. Watch this clip, for example, from Inside Job, Charles Ferguson's outstanding documentary about the economic crash. Asked why they had given a AAA rating to bundles of extremely risky sub-prime mortgage debt, the heads of the credit rating agencies lined up to tell a Congress inquiry that, in the words of Moody's CEO Raymond McDaniel, their ratings "are just opinions."

Nevertheless, these undemocratic purveyors of "opinion" are being invited into the heart of our public life. Only recently the NHS regulator Monitor floated the plan to scrap the current assessment system that rates NHS providers (hospitals, ambulance services etc.) on clinical quality and instead use the rating agencies to grade their "financial strength" - with those achieving a low grade liable to lose their contract to operate in the NHS.

The mind well and truly boggles. Chancellor Osborne's office is somehow trying to spin the Moody's report as a validation of his austerity measures (you can read BBC Economic's Editor Stephanie Flanders excellent editorial here), since the Moody's report suggests that the downgrade might go ahead if the UK eases up on the cuts.

But should the credit rating agencies, who are accountable to no-one and have shown time and again that there predictions are basically just a stab in the dark, have this level of influence over government policy? We complain about EU law violating British sovereignty, but the credit ratings agencies exert a far greater sway over national governments than Brussels.

Maybe there is hope though. Last summer Standard and Poor downgraded the US's triple-A rating, to which the market's response was largely: So what? It's time for governments and policymakers to stop running scared.