tag:blogger.com,1999:blog-8817171247555815363.post233700374621971306..comments2024-03-26T05:57:44.937+00:00Comments on True Economics: Economics 28/05/2010: Spain's downgrade is a warning for IrelandTrueEconomicshttp://www.blogger.com/profile/07350536454228478974noreply@blogger.comBlogger4125tag:blogger.com,1999:blog-8817171247555815363.post-4462503315925100432010-05-29T21:50:52.690+01:002010-05-29T21:50:52.690+01:00Would anyone like to ponder the state of the natio...Would anyone like to ponder the state of the nation 5 years from now? Given these horrific realities.jpchttps://www.blogger.com/profile/04703140386159492972noreply@blogger.comtag:blogger.com,1999:blog-8817171247555815363.post-67460653187501809532010-05-29T01:13:06.245+01:002010-05-29T01:13:06.245+01:00Oh, PS: I have been critical of rating agencies wo...Oh, PS: I have been critical of rating agencies work on a number of occasions before. Here are some examples:<br /><br />http://trueeconomics.blogspot.com/2009/01/irish-credit-ii.html<br /><br />http://trueeconomics.blogspot.com/2010/01/economics-26012010-s-note-on-irish.html<br /><br />http://trueeconomics.blogspot.com/2009/03/housekeeping-and-s.html<br /><br />http://trueeconomics.blogspot.com/2009/02/s-visit-pints.html<br /><br />and so on...TrueEconomicshttps://www.blogger.com/profile/07350536454228478974noreply@blogger.comtag:blogger.com,1999:blog-8817171247555815363.post-81075645328883525402010-05-29T01:07:06.793+01:002010-05-29T01:07:06.793+01:00@Anonymous. Thanks for commenting and reading.
Y...@Anonymous. Thanks for commenting and reading. <br /><br />Your points are correct - rating agencies did miss a host of risks in their assessments of the relatively new and high risk products. And they missed that badly. Rating agencies also had some clear-cut conflicts of interest relating to the products you named and more. <br /><br />Not to defend them, however, one must recognize that rating agencies have a relatively good historic track record in rating long established products, especially sovereign bonds. There are many (some technical) reasons as to why they are more successful in rating some products, while simultaneously are unable to see the obvious truth about other.<br /><br />To actually further strengthen your own case, rating agencies are virtually never able to lead the markets. They usually are lagging indicators - acting as a reflection of what is already known to professional and institutional investors and as signal bearers for some mandate-driven investors.<br /><br />As I always suggest, one should tackle not messenger, but the message. Being wrong before does not preclude one from being right in the future. <br /><br />What rating agencies are doing in the current case of the PIIGS is giving public exposure to the cancer that is debt overload afflicting European (and also other) economies, as well as to the unsustainable model of expanding fiscal deficits. In doing this, for all their apparent falls and errors, they are providing a useful service to societies and economies at large.<br /><br />People like myself have only a limited power to bring facts (and our views on these facts) to the public. Rating agencies, following in our footsteps have much greater power to expose the fallacy of the economic systems based on Governments (and with Governments' gentle 'guidance', incentives and occasionally outright blessing, economies at large) borrowing unsustainable, economically unjustifiable, reckless amounts of funds to finance day-today life style choices for their public servants, privileged elites - private and public alike - and narrow interest groups. <br /><br />You can elect to ignore rating agencies because they get things wrong from time to time or even often. You are free to ignore the facts. But don't say you have not been warned when your Government comes to you to take away your own and your children's future, because it was mortgaged (often by someone else) up to afford unearned pensions and wage increases for the few, the many, or even for your self...<br /><br />Hope this explains. <br /><br />Best regards and keep on reading and commenting.TrueEconomicshttps://www.blogger.com/profile/07350536454228478974noreply@blogger.comtag:blogger.com,1999:blog-8817171247555815363.post-60314903275832656222010-05-28T23:19:20.829+01:002010-05-28T23:19:20.829+01:00Dear blogger,
Where is these rating agencies when ...Dear blogger,<br />Where is these rating agencies when ninja mortgages?<br />Where is theses rating agencies when selling and buying houses are treated sustainable economic models?<br />If the market rating agencies are so "Intelligent" why didnt they screamed when there sub-prime is the biggest economic activity?<br /><br />Ta,Anonymousnoreply@blogger.com