tag:blogger.com,1999:blog-7905515.post6460550200809459148..comments2024-03-14T11:09:32.759-05:00Comments on Falkenblog: Rating Agencies Causing the US Debt Crisis?Eric Falkensteinhttp://www.blogger.com/profile/07243687157322033496noreply@blogger.comBlogger9125tag:blogger.com,1999:blog-7905515.post-23728389825294053592011-07-29T15:34:14.109-05:002011-07-29T15:34:14.109-05:00"As the markets are now questioning the AAA r..."As the markets are now questioning the AAA rating of the USA..."<br /><br />There's a lot of chatter about this, but where do you see evidence that the market doubts the U.S.'s AAA rating? Yields have not gone up, despite the endless claims that they will.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-7905515.post-21638181467862401102011-07-29T08:59:49.689-05:002011-07-29T08:59:49.689-05:00I always wanted to go to a third world country, bu...I always wanted to go to a third world country, but thanks to Obama I don't even need to move. :)kerwinhttp://www.surveymoneymachine.comnoreply@blogger.comtag:blogger.com,1999:blog-7905515.post-4490992868749282522011-07-29T08:11:00.118-05:002011-07-29T08:11:00.118-05:00The problem I had with the Jenkins article was the...The problem I had with the Jenkins article was the implication that the ratings agencies should sit down and shut up and stop rating the holy government. <br /><br />The ratings agencies, for good or ill, and with greater or lesser skill, are in the business of rating an entity's current situation so that investors can have a measure (one of several, unless the investor is an idiot) of the quality of entity he's getting into. <br /><br />A free market will allow claptrap to enter and drool onto their keyboards. The competition of that free market will weed out that claptrap in relatively short order. That competition is fostered by government not mandating this or that rating agency as a standard whose ratings must be met by certain types of financial institutions. It is the government that should sit down and shut up. The choice of investigative information to use, including none at all and trusting to a Mk IV Dart and Ouija board target, is itself a market decision, not a government one.<br /><br />Eric HinesE Hinesnoreply@blogger.comtag:blogger.com,1999:blog-7905515.post-50780526420548419872011-07-28T23:59:34.756-05:002011-07-28T23:59:34.756-05:00The real problem is that the rating agencies are n...The real problem is that the rating agencies are not actually independent of the financial/banking system. More importantly, the banking system is nominally a private system but is in fact a branch of the USG. The way it works is through the threat of audits and regulatory harassment and other means to coerce "cooperation" from docile and obedient bankers and credit rating agencies. The pronouncements by these agencies are just rationalizations and whitewash of the obvious fact that the USG no longer deserves its AAA rating. This will end badly just like the mortgage crisis only much much worse.dmfdmfnoreply@blogger.comtag:blogger.com,1999:blog-7905515.post-30462762243285754152011-07-28T17:24:19.146-05:002011-07-28T17:24:19.146-05:00how about removing any restrictions on the legal r...how about removing any restrictions on the legal requirement to use ratings?Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-7905515.post-73810021711961443492011-07-28T13:27:15.046-05:002011-07-28T13:27:15.046-05:00Mercury, I think that's the whole point. Whil...Mercury, I think that's the whole point. While the two BS degrees are different, a rating from an NRSRO is just that - a rating. <br /><br />The collateral rules don't say where the rating needs to come from, and so the market will seek out the cheapest or softest option.PF2https://www.blogger.com/profile/11769532278555841482noreply@blogger.comtag:blogger.com,1999:blog-7905515.post-58867955426318791672011-07-28T11:57:46.716-05:002011-07-28T11:57:46.716-05:00Competition, track record and professional reputat...Competition, track record and professional reputation ARE incentives to provide accurate ratings. Few are fooled into thinking that a BS from MIT is interchangeable with a BS from the University of Phoenix.<br /><br />Your article doesn't mention anything about public pension funds (and others) being required to get a stamp of approval from government protected NRSROs.Mercurynoreply@blogger.comtag:blogger.com,1999:blog-7905515.post-74282198451985056542011-07-28T11:10:34.472-05:002011-07-28T11:10:34.472-05:00Mercury, more raters means a lowering of standards...Mercury, more raters means a lowering of standards as each issuer can go to many more places to get rated.<br /><br />This is one world in which opening barriers of entry lowers standards. The solution is to create incentives for raters who provide accurate ratings, or punish continuously poor ratings. <br /><br />See the following for ways to achieve this:<br /><br />http://ratingsreform.wordpress.com/2011/07/18/a-ratings-free-new-world/PF2https://www.blogger.com/profile/11769532278555841482noreply@blogger.comtag:blogger.com,1999:blog-7905515.post-64384020113468012102011-07-28T08:43:00.529-05:002011-07-28T08:43:00.529-05:00Gotta love the government and it's appologists...Gotta love the government and it's appologists crying: "Wah!, my duopoly isn't playing ball!"<br /><br />How about fostering a lower barrier to entry, competitive marketplace for the debt rating industry fellas?Mercurynoreply@blogger.com