Europe Rediscovering Seditious Libel?

Spiegel Online reports:

European Internal Market Commissioner Michel Barnier is considering a move to ban [bond ratings] agencies from publishing outlook reports on EU countries entangled in a crisis, according to a report in Thursday’s issue of the Financial Times Deutschland newspaper.

In an internal draft of a reform to an EU law applying to ratings agencies obtained by the paper, Barnier proposes providing the new EU securities authority, the European Securities and Markets Authority (ESMA), with the right to “temporarily prohibit” the publication of forecasts of a country’s liquidity.

The European Commission is particularly concerned about countries that are negotiating financial aid — for example from the euro rescue backstop fund, the European Financial Stability Facility (EFSF), or the International Monetary Fund (IMF). A ban could prevent a rating from coming at an “inopportune moment” and having “negative consequences for the financial stability of a country and a possible destabilizing effect on the global economy,” the draft states….

Barnier is convinced that the ratings agencies don’t always correctly assess the situation at such moments and is thus calling for the possibility of a ban on the assessments. His view is shared by many politicians and economists, who believe that the ratings agencies falsely assessed the economic situation in some countries and further exacerbated the crisis with their forecasts, causing frequent unrest on the markets….

Under the proposal, the ban could only be applied if a country were currently negotiating for aid and other strict criteria were also fulfilled. For example, the assessment would have to pose a threat to other countries or the EU financial system as a whole. EMSA would also be required to agree on the measures with other regulators….

The analogy to seditious libel, I think, is quite close. Traditional seditious libel barred, among other things, statements that diminish the reputation of the government, whether the statements were opinion, true factual assertions, or false factual assertions; likewise here. The rule that is apparently being proposed would essentially be a seditious libel law focused on a particular set of statements about a government’s finances. Thanks to InstaPundit for the pointer.

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