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The Debt Crisis – A Polite Message to the Ratings Agencies

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Who The Fuck Do You Think You Are!?

Let me get this straight, Moody’s, Fitch’s, Standard and Poors, etc. Back in 2006-8, you were the guys who gave AAA ratings to toxic mortgage junk because you were paid handsomely to do so by the very institutions that, at the same time, were hawking these time-bombs to investors.

Pardon little old me for suggesting that perhaps being paid was – I don’t know – a conflict of interest. That maybe, just maybe, you let the dough go to your heads and chose to make this shit smell good to please the piper. No? Not possible, right?  Clients pay for ‘independent’ advice, right? At the time you rated those securities they were strong and the fundamentals were good, right?  I get it.  I mean, why rate multi-year bonds, you know, over the long term. Silly idea. Silly, silly, silly.

Thereisnoplan is thoroughly convinced. The ratings agencies would clearly never let that new cash smell get in the way of their bona-fides, even if downgrading those ratings on the mortgages securities would mean that the guys holding them would shop around for a better rating to pump the sticker price and your competitors would get rich on your back.  Of course, not!  Never!  Perish the thought!

And now here we are in 2011, and with the debt crisis in full flow, the incorrigible Ratings Agencies fanning the flames by threatening to downgrade US debt if we default. You guys know what would happen if you did?  Interest rates would rise, probably for years.  Hundreds of thousands of people would lose their jobs. “US” corporations would accelerate their outsourcing for cheap labor.  The housing crisis of 2008-11 would look like a blip next to the slump that followed. Oh, and consumer demand would drop like a stone, shrinking revenues further, and making our debt….even bigger. Thanks, guys.

Now, I’m not sure exactly why anyone listens to the ratings agencies. They are private companies riven with massive conflicts of interest, huge hunks of uselessness that somehow manage to be at the nexus of all that goes financially pear-shaped in this great country of ours. It’s a mystery to me that they have any credibility at all after the debacle of 2008. But here they are again, doing their damnedest to turn a non-crisis into a calamity, partly, no doubt because they’re ‘fiscal conservatives’ putting their political oar in where they’ve no business putting it. Wall Street has traded on its thin veneer of brainiac respectability for a long time now, and it’s still fucking working.

But wait. Surely, this latest downgrade threat might be bad for business, boys. Surely there’s a risk that people might finally say, enough and have the rules governing what you do changed on your asses, after the Great Recession truly does become a new Great Depression – with your stamp on it.

People might even make the following simple calculation about the “Ratings” that the Ratings agencies shit out.

Pay for ratings =  AAA on Toxic Mortgage Securities.

Don’t pay for ratings = AA down to D on the Good Faith of the United States of America.

Are you trying to tell us something?  Because a brown envelope full of cash is not forthcoming.

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Written by coolrebel

July 17, 2011 at 9:01 pm

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