I find the S&P rating panic to be bizarre. They have decided to throw their weight into politics after a decade of incompetent performance such as giving high ratings to the toxic assets that almost destroyed our economy. This will certainly enhance their reputation for neutrality and judgment. After a decade of predictions, often frightening in their irrationality, why not jump into a new arena of prediction?
These guys shouldn’t be making prognostications. The ones who helped create the current economic mess should be winnowed out between the merely incompetent and those that have committed fraud.
I get tired of these highly paid experts. I have freshmen and sophomores in starting business classes that would never even have considered making this kind of decision.
Perhaps, I should have them send in some resumes.
I guess the air up that at the top of the financial industry is so intoxicating, that these people could think they were so influential that the government itself will bow to their legislative demands. This isn’t Greece or Ireland. This is the United States and if some half-assed twerp thinks this economy rises or falls on his judgment, he needs to be put in his place.
Please read James Fallows’ post on this matter.
“S&P adduces no new information that I can see. Competent ratings of opaque instruments such as, oh, mortgage-backed securities would be very useful to investors (not that ratings agencies troubled to provide competent ratings in that case, obviously). But why should anybody need that kind of help in judging the soundness of US government bonds? S&P knows nothing about them that you or I don’t know.”
And I like James K. Galbraith’s derisive guffaw, For More…