Just Say "NO" to the Credit Rating Agencies

[Donnachaidh]

http://www.truthout.org/011709Y

The credit rating agencies have got us, coming and going. First they help cause the biggest economic calamity since the 1930's. And now they tell us we can't take the fiscal measures needed to get us out of this mess. Meanwhile, they are laughing all the way to the bank (that is, if they can find one that is still solvent). Why are we still listening to them?

:snip:

Now, to prevent this very same crisis from turning into a full-blown catastrophe 1930's-style, governments around the world - from Obama to Brown to Merkel and beyond - are finally beginning to do the right thing: they are planning major fiscal spending operations to place a floor on the terrifying downward economic spiral and to begin to turn the world economy toward recovery. Even the austerity-loving IMF is strongly supporting these initiatives.

Yet now, Standard & Poor's and Fitch are sending "credit warnings" to other governments, threatening to downgrade their sovereign debt ratings if they "allow" their fiscal deficits to increase too much. Wednesday, Standard & Poor's downgraded Greece's sovereign credit rating. Explaining the downgrade, Marko Mrsnik, S&P analyst, said: "The global financial and economic crisis has, in our opinion, exacerbated an underlying loss of competitiveness in the Greek economy." (Financial Times, January 14, 2009). And in recent days, three other eurozone countries - Portugal, Ireland and Spain - have been warned by Standard & Poor's to "fix" their public finances or face downgrades. Under the current system, such downgrades would increase the cost of raising funds and be taken as a signal to investors to shy away from these investments.

Most significantly, these public warnings fire a shot across the bow of larger countries - such as Germany, the UK and France - that they had better not go too far down the road of fiscal expansion, or they might face a similar fate.

MORE at the link above --

[HysteryDiagnosis]

1. Someone should put their credit rating in the toilet. Seems possible

to me.... and who better deserves it than those who lord over the hardships of others.

[Statistical]

2. Most countries have defaulted on their debt in the past

The US is one of the few countries who have not. Generally countries default in much the same manner as consumers or businesses do. Income (taxes) slow while expenditures rise and debt becomes a larger and larger % of GDP.

If they DIDN'T downgrade countries like Greece and IF Greece defaults on their debt in say 2011 you would blame them for looking through rose colored glasses.

[JackRiddler]

3. Standard & Poor and Moody's should be shut down, their executives indicted...

They were the most important facilitators for the scams that led to the insolvency crisis. They knew they were taking pay from bond issuers to put Triple-A on doomed junk and that this would sucker millions of investors. They're as bad as Arthur Andersen. Now they're going to step in as Margaret Thatcher's hitmen from the grave? (Oh, sorry, maybe she's not dead yet.) All of the banking scandals converge on the corrupt ratings agencies and the SEC, those are the first entities to nail and then the rest of the criminal banking structures might follow.

Paying for an independent agency to rate your securities should be a requirement, not an option. It should be done by a single public agency with a strict limit on what proportion of securities get the top rating. Working for a security-issuing agency should disqualify you from being hired by this agency (or by the SEC) for 10 years.

[Waiting For Everyman]

8. Exactly, they need to be prosecuted bigtime - I can't believe they have the nerve to

even open their mouths now. They need to be over, and the same for the individual credit reports too. They ARE the problem.

[many a good man]

12. STRONGLY agree!

If they had done their fiduciary responsibility these derivatives would never have gotten out of control.

:kick:

[Dogmudgeon]

4. Sue them into bankruptcy

Credit agencies are legalized defamation organizations that function fast-and-loose without accountability. Anyone who finds so much as ONE piece of incorrect derogatory information on their credit report ought to have automatic standing to sue the agency.

--p!

[ejpoeta]

5. imagine if countries like China who basically OWN us right now

called in their chips. we'd be screwed. so i think s&p oughtta back the f off.

[Greyhound]

7. They can't "call in their chips", they have purchased bonds, those bonds have a maturity

date and set interest. Their biggest fear is that we devalue our currency so much that those bonds have no value when/as they are paid.

[JackRiddler]

9. Their biggest fear?

Might have been, a few years ago. At this point, I'm sure they've accepted the ultimate devaluation of the dollar due to essential insolvency of the whole country (corporate, government and private debt, not to mention the impossible inverted pyramid of the various derivatives schemes) as an inevitability, and are looking for when and how to best get out with the least damage (which they understand by now they cannot fully escape).

They can't call their chips in, you're right. They can just stop buying t-bills, and that would be the end of USG finance as we have known it. The printing presses would roll, so to speak.

[Greyhound]

10. That is true, although they are still not the largest buyers of our junk.

I think it is still the Saudis. If I/you have some time, the back page of the Economist has the current info.

[JackRiddler]

11. Actually, the biggest buyer of US Treasury bills is the Social Security fund...

and those in government wish to return the favor by lying that Social Security is insolvent when it is in fact the government that is bankrupt, and calling for its "privatization" (i.e., the diversion of funding for the only program that's actually worked to keep people from complete impoverishment into the Ponzi schemes of Wall Street).

[Greyhound]

6. K&R #5, welcome ot the greatest page.

You said it in the title, all we have to do is to collectively say "No!"

The consumer credit rating companies are just as bad in a slightly different way, immense power and no accountability.