Tuesday, September 11, 2012

More unbridled stupidity from the rating agencies

So Moody's comes out and says this today...

"...the U.S. could lose its triple-A debt rating if next year's budget negotiations do not produce a downward trend in the country's debt-to-gross-domestic-product ratio."

Yet the St. Louis Fed says this:

“As the sole manufacturer of dollars, whose debt is denominated in dollars, the U.S. government can never become insolvent, i.e., unable to pay its bills. In this sense, the government is not dependent on credit markets to remain operational. Moreover, there will always be a market for U.S. government debt at home because the U.S. government has the only means of creating risk-free dollar-denominated assets

And S&P downgraded the U.S. credit rating last year and bond yields plunged to record lows.

Wouldn't you think that would cause Moody's and the other credit rating agencies to rethink their rationale?


That's because they don't give a shit. They are arrogant; fixated on their view of the world, and consider themselves smarter and better than everyone else. I knwow, I worked at a rating agency (S&P).

Their attitude is, they don't have to read no stinkin' commentary from the St. Louis Fed. They don't have to acknowledge their deep misunderstandings about currency issuers and non-currency issuers. They don't have to admit that they got the whole, entire, subprime fiasco horribly wrong.

They're Moody's. They're S&P. They're Fitch. They can say whatever they want.


Unforgiven said...

Ya know, I used to think we should buy Moody's and turn it in to a taco stand, but they're so abysmally stupid that they'd probably get stuck at the part where they have to figure out which side of the tortilla to put the fillings on.

y said...

are these guys all controlled by the big wall street banks, or not?

mike norman said...

I was fired from S&P in 2001 after writing a negative piece on GM, which was trading at an all-time high at the time. S&P's chief auto analyst, Scott Sprinzen, took exception to my research. I wouldn't back down. I was fired. Long story short...GM went bankrupt and had to be bailed out by taxpayers. Scott Sprinzen eventually "downgraded" GM at around 26 per share. He's still there!

Wekasus said...

Crazy story Mike!

paul meli said...

"…they'd probably get stuck at the part where they have to figure out which side of the tortilla to put the fillings on."

Too funny !! You win the internets for today.