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You guys are crazy if you think this has to do with the deficit and not the debt ceiling and the fact that the ratings agencies are fraudsters. This pretty much the financial sector reminding the gov who is boss.
Swapping one set of problems for another most likely. I'm still game.
You guys are crazy if you think this has to do with the deficit and not the debt ceiling and the fact that the ratings agencies are fraudsters. This pretty much the financial sector reminding the gov who is boss.
That is one of the things that bothers me about it.
No, in this case, they see that government bonds may face a problem of not being a safe investment. I think they are true to their business. Bonds are rated by risk, and USA government bonds are becoming risky. They stopped deserving a AAA rating long ago, but if anything, were afraid to degrade them before.
How are they boss?
It is a rating of how safe a bond investment is.
Are you saying that US bonds are completely safe from losing value over time?
So who blinks first? S&P in the face of potential prosecution, or Congress in the face of having to deal with the ramifications of a downgrade?
There's going to be a downside no matter what we do. The most painful downside will result from doing nothing.Sure. Still feels creepy tho, and there are possible downsides.
S&P gains nothing out of dropping the rating and actually hurts itself. Ill believe their threats when that changes.
The ratings agencies are financed by Wall St.
I have no doubt S&P is doing exactly as they are paid to do.
Another conspiracy theory?
S&P gets paid to provide a rating regardless of what that rating is. Downgrading U.S. debt doesn't hurt them in the least.
S&P I would guess.
You underestimate the capacity of the US Congress to bollix things up.
The clarion call of reform was wrong respecting health care reform. Doing nothing would have been much preferable to the reform we got.
I'd be interested to see the analysis showing that "doing nothing" is the most painful medicine. For example, wouldn't doing nothing ostensibly include allowing the Bush/Obama tax cuts to expire?
Downgrading the us debt hurts the entire world. As the us goes the rest of the world goes.
Are you suggesting the S&P lie? Who would trust their other ratings then?
Nope. But there are visible cracks in the catbird seat.
No reason not to downgrade a bond when it needs a downgrade.
Try to keep up.
Wall St pays the rating agencies for ratings on the Wall St sells.
A HUGE conflict of interest, and, yes, a conspiracy.
Well do ented when toxic mortgages hit the news a couple years ago.
You're typically naive if you think the ratings agencies are impartial umpires calling balls and strikes according to rigid, sacred rules. The working assumption is the entire financial system is corrupt, gamed.
Perhaps. Although it seems S&P has already rung the bell that can't be un-rung.
Fair points. I'll rephrase to say that the biggest downside lies along the path we are currently following.You underestimate the capacity of the US Congress to bollix things up.
The clarion call of reform was wrong respecting health care reform. Doing nothing would have been much preferable to the reform we got.
I'd be interested to see the analysis showing that "doing nothing" is the most painful medicine. For example, wouldn't doing nothing ostensibly include allowing the Bush/Obama tax cuts to expire?
So should ratings agencies base their ratings off of financial realities, or off of what the perceived impacts of a ratings change might be?
Bonus question: Which approach do you think ratings agencies were using leading up to the financial meltdown?
Yep...
A conspiracy theory.
I agree. Please pardon me if I do not celebrate it.
This train has been going by for a long time. The S&P downgrade is the caboose. Moody's and S&P are always late to the party. They had Enron rated great right up until 2 weeks before they imploded even though the stock price had gone into the tank. A ratings downgrade isn't the beginning, it's the fat lady warming up.
They absolutely lie. Check their ratings prior to the financial crisis of either the US firms or the securities themselves that caused the collapse.
The same approach they are using now. I firmly believe ratings agencies should operate differently, CG. Thats not the point. We can talk about what S&P should do but we're talking about what they WILL do.
They base their ratings on the information they have. They don't know how to properly use crystal balls. Just how do you suggest they know in advance, criminal activities of reporting and operational practices?
I am gonna side with Manny on this one, at least on securities issues. There is a real conflict of interest in the ratings agencies being paid to rate products by the people that produce the products.
I know that corruption can exist, but I don't think it's the commonplace. How many people are paid to rate how many bond producers? It has to be several thousand. Of course some can be paid off.
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