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Discussion Starter · #1 ·
Didn't we have a total financial melt down courtesy of toxic waste in the Freddies and banks and the real estate market fueled by congressional market manipulation? Why were the weaker European governments given top top ratings when to all it was evident they were just houses of cards waiting to fold?

Wasn't it the rating agencies responsibility to sniff out that rot and accurately pin a risk label on?

Why should we trust them any more than our governments where EVERYTHING and EVERYBODY seems to be bought or bribed or just corrupt for corruptions sake?

I am ignorant of such matters so I thought I would ask.
 

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Hardly an ignorant question.

The rating agencies seriously screwed up the housing market. The created the atmosphere for some really fraudulent practices.

With many things in life, you have to take their opinion with a grain of salt.
 

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That's because they are in bed with the federal government, banks and mega-corporations!

Does the U.S. with all of its debt problems and cannot balance a budget warrent a AAA rating?

I do not think so...
 

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Barrio Bajo Señor
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much of the entire U.S. financial system is predicated upon U.S. debt being rated AAA. how many pension funds, insurance companies, endowments, foundations, banks and mutual funds are limited, by charter, to only owning AAA-rated debt. If the U.S. were to suddenly be rated AA or even AA+, the amount of treasury selling that would ensue would utterly paralyze The Ponzi. Simply put, there is no way that a U.S.-based ratings agency will ever be allowed to downgrade U.S. debt. Period. The ratings agencies will go as far as they can without actually downgrading. You saw it last night with Moodys. "AAA with a negative outlook" is as far as they will ever be allowed to go.
 

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Prepared
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Everyone else beat me to the punch. The ratings agencies really are messed up. There are undoubtedly many disincentives for them to be honest, which is why we've had all of this economic trouble the past decade or so. The recession didn't come out of nowhere -- it undoubtedly was forming long in advance, when ratings agencies ignored the hazards of bundled derivatives, etc. and monopoly money.

They're pretty much irrelevant. Imagine if various other government departments, such as Weights & Measures were as ill-defined. When you go to the gas pump, you really expect the gauges to be accurate to the fraction of a gallon, and the gas grade to be accurate within 1%. Evidently, high finance is not an empirical science when you have so many shells and funny money in the game.
 

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People pay attention to the rating agencies because they're the only game in town. Moody's, Standard and Poors, Fitch, they may be incompetent, dishonest, and inept, but who ELSE can folks turn to to evaluate risk? Their bankers? PLEASE.

I note the smaller rating firms like Dalton's have downgraded the U.S.' bond rating already, but as long as the Big 3 don't, that won't matter. Fitch has said downgrade, Moody's holding steady, and S&P haven't made up their mind yet. I would imagine there's unholy pressure being brought behind the scenes by the government, including possible threats to revisit criminal prosecution of the firms in the wake of their screwing up ratings during the housing market / business crash, to make them be 'reasonable'.
 

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Who else? Sometimes there are problems without answers. Imagine if the local weatherman also happened to own a golf course, resort, etc. or his brother did. You can better believe it would be a sunny forecast every weekend.

It's ridiculous that these ratings agencies haven't downgraded the US. With no new revenue, no specific cuts named, and a higher debt ceiling, the US is clearly a cruise ship headed to the ice pack. I don't know anyone on main street who was reassured by yesterday's political drama. Why do the ratings agencies feel so more confident?
 

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Discussion Starter · #8 ·
OK so rating agencies are just another part of this whole emperor has no clothes charade. It all reminds of me the johnny depp Alice in Wonderland where all the queen's court have some disguise to make them also look deformed. The insanity is genetically part of the political body now and not just tolerated but endorsed by the fearful and cowardly.

Time to pay the piper folks. The bill is due.
 

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Ratings agencies are funny, they are paid by the companies that they are rating.

The Ratings agencies have a natural monopoly, as the govt controls how many there are.

Institutionalized conflict of interest?
 

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much of the entire U.S. financial system is predicated upon U.S. debt being rated AAA. how many pension funds, insurance companies, endowments, foundations, banks and mutual funds are limited, by charter, to only owning AAA-rated debt. If the U.S. were to suddenly be rated AA or even AA+, the amount of treasury selling that would ensue would utterly paralyze The Ponzi. Simply put, there is no way that a U.S.-based ratings agency will ever be allowed to downgrade U.S. debt. Period. The ratings agencies will go as far as they can without actually downgrading. You saw it last night with Moodys. "AAA with a negative outlook" is as far as they will ever be allowed to go.
You are right on target. As a retired banker of over 30 years, we were always under FDIC or State regulators. Their requirements were that we ONLY invest in AAA treasuries. However, now there is pending regulation that will re-iterate the AAA requirement - with US Treasuries being an exception to the rule. Since banks purchase large amounts of Treasuries for liquidity and reserve purposes, this is a very insidious "head them off at the pass" direction.
 

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much of the entire U.S. financial system is predicated upon U.S. debt being rated AAA. how many pension funds, insurance companies, endowments, foundations, banks and mutual funds are limited, by charter, to only owning AAA-rated debt. If the U.S. were to suddenly be rated AA or even AA+, the amount of treasury selling that would ensue would utterly paralyze The Ponzi. Simply put, there is no way that a U.S.-based ratings agency will ever be allowed to downgrade U.S. debt. Period. The ratings agencies will go as far as they can without actually downgrading. You saw it last night with Moodys. "AAA with a negative outlook" is as far as they will ever be allowed to go.
They just did...but somehow S&P made a $2 trillion mistake but still went ahead with the downgrade. How can you screw up that bad...twice?

The UK and France (and others) have a much larger debt to GDP ratio yet still maintain their high AAA rating. More at play here...
 

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Barrio Bajo Señor
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yeah, it was enough to scare me out of my final 401K last night. i was hoping to get to 2012 for tax implications.
 

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Jihaadi GoBOOM
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The rating agencies are lackeys of the wall street banking cartel, remember when they pumped Merril's, Lehman's, Goldman's market rate MMA's to the public, bundled disguised worthless home mortgages? That the bloodsuckers at Goldman were SHORTING 2 to 1 out the back door? YOU are to support the centralized power of the cartel.Never forget it.
Banks come to depend on their commonly held belief that they control wealth that does not in fact exist, so the possibility of wealth being decentralized in a way that drives consumer spending is greatly reduced. It has to be, because to meet the demands of their own fictional wealth claims, banks must persuade others, i.e. many or most people, to take on unsustainable debt. RAISE the debt limit, it's good for the "economy", meaning Goldman Sachs.
We need to remember that not everyone trades stocks and bonds and steals from the American taxpayer for a living, not everyone is hoping cartel banksters can continue to reap obscene profits without providing any quality of service to the middle class, and not everyone is served by a system that focuses on concentrations of wealth in the claws of the protected banking cartel elite parasites at the top of the income ladder.
The "economy" needs to contract, not expand, even though it will hurt the sheeple every time they can't buy that new toy they don't need anyway. The bankers be damned.
QUIT BORROWING, QUIT SPENDING. ENOUGH! FT WALL STREET BANKERS.
 
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