Ratings Firms Misread Signs of Greek Woes

[alp227]

Source: NY Times

In a stern pronouncement, Moody’s Investors Service this week warned of rising prospects for multiple defaults by countries in the euro zone and credit rating downgrades of nations across Europe if leaders should fail to resolve the spreading debt crisis.

When it comes to Greece, critics say Moody’s should have been tougher a lot earlier.

Until two years ago, the ratings agency took a relatively lax approach to growing signs of troubles in Greece, epicenter of the current crisis, even as the country plowed ahead with a borrowing binge that jeopardized its fiscal condition.

Moody’s held off dropping its strong A rating of Greece’s bonds despite growing political turmoil and economic woes through 2009. Investor fears over Greece’s short-term financing needs were “misplaced,” Moody’s said in a report in early December 2009. Twenty days later, after a review, the agency downgraded the nation’s debt, the last of the major ratings agencies to do so.

Read more: www.nytimes.com/2011/11/30/business/ratings-firms-misread-signs-of-greek-woes.html?pagewanted=all

[russspeakeasy]

1. Maybe they could bundle Italy's and Greeces' government

bonds and have them stamped AAA. It worked before. The next 6 months will be a picnic compared to the next six years. (when the retirees discover their pensions are not there).

[Blue_Tires]

2. for all their big-money high power brains, its funny how

often these people miss the mark with their forecasts and analysis...

or maybe it isn't an 'accident' at all...

[alcibiades_mystery]

3. These people seem to be utterly incompetent at their designated function

They constantly "misread" the "signs" of risk, first plunging the world into global recession, and now deepening the pain by shredding the Eurozone to bits.

If it was a doctor who misread signs this often and this severely, surely he or she would have faced license revocation by now.

[leveymg]

4. Their function is to support bond underwriters and salesmen. Not incompetent,

just crooked. The world's credit markets and financial system would collapse without inflated value assessments.

[orwell]

5. Moody's = Useless

All of these ratings agencies basically just phone it in.

Everyone can absolve themselves of due diligence by claiming that someone else has done the work.

AAA - AA AA+ BBB are all meaningless in a house of cards...