If you haven’t already read it, let me recommend Michael Lewis’s book The Big Short. It chronicles the sub-prime mortgage crisis that led to a near-collapse of the world financial markets and plunged us into the worst recession since the 1930s. Remember all that alphabet soup we came to know and loath: MBS (Mortgage Backed Securities), CDO (Collateralized Debt Obligations), and CDS (Credit Default Swaps)?
Among the key players in this fiasco, from which we are still trying to recover, were the rating agencies: Standard & Poor’s, Moody’s and Fitch. These agencies routinely gave AAA ratings to MBSs and CDOs that were thrown together by the major investment banks without investigating to find that the underlying mortgages were junk. Why would they do this? Because they were paid handsomely by the big investment banks. We have a good English word for this practice: prostitution.
So, now our friends at Standard & Poor’s come forward to say that they are lowering the rating on U.S. debt, from AAA to AA, causing a new round of consternation in the financial markets. And why should we listen to anything they have to say? Have they given up “the life,” disciplined their bad actors, made restitution for the billions that were lost, and regained their good name? Not to my knowledge.
Before the world lends any credibility to Standard & Poor’s ratings, perhaps we should have the answer to a simple question: Who is paying them now?
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Manure
1 week ago
Hear. Hear! I don't know, there is so much in the public eye right now about the corruption and incompetence in Washington and on Wall Street it is really ugly. Seems like they are all bought and paid for, not a one accountable to the common man. Not a pretty picture at all.
ReplyDeleteI can only trust a politician or a Wall Street stiff as far as I can throw him/her. Quite a challenge indeed, what with the stacks of unmarked bills stuffed in their trousers/pantskirts.
ReplyDelete