Now its all the fault of the credit ratings agencies

MacMickster

http://www.bbc.co.uk/news/business-15739234

EU targets credit rating agencies

The European Commission has put forward stricter rules for the credit rating agencies that rank countries' and companies' debt.
It says the agencies, including Standard & Poor's, Moody's and Fitch, should follow stricter rules, be more transparent about their ratings and be held accountable for their mistakes.
Agencies' reports help investors to judge borrowers' creditworthiness.
Downgrades from them can provoke higher interest rates for weaker borrowers.
The EC internal market commissioner, Michel Barnier, said the agencies, which are privately owned by investors, had a serious and widespread effect on individuals.
"Ratings have a direct impact on the markets and the wider economy and thus on the prosperity of European citizens," he said. "They are not just simple opinions."

So it seems that the EU now thinks that the agencies shouldn't give negative opinions to investors to help them judge the risk of investing in government bonds, as that makes investors less likely to want to invest in those bonds, hence driving up interest rates.

Perhaps those who post on other boards who are struggling to get a mortgage with a poor credit rating could use this same argument to persuade Experian etc to only report nice things about them.

Graham_Devon

He also said they were not infallible in their assessments and had made "serious mistakes" in the past.

Yer....like not downgrading them.

Everything you read comes across as either sheer desperation or a real desire to become a dictatorship.

Hoopie1

Indeed. By all means criticise them for not downgrading early enough or harshly enough, or simply being wrong for a long time, but this is insanity. Besides, some guy at work was telling me that sovereign ratings react to the market more than the other way around, and he used to be a bond trader.

StevieJ

Graham_Devon wrote: »

Yer....like not downgrading them.

.

Or be a bit more careful

Standard & Poor's accidentally released a message to some of its subscribers on Thursday saying that it had downgraded French debt from its top AAA rating.
S&P said it was investigating what had gone wrong and stressed that France still had an AAA rating.

http://www.bbc.co.uk/news/business-15686580

The_White_Horse

the EU does not like democracy or freedom.

it is possibly the most dangerous institution ever.

look how it has removed the heads of Greece and Italy and replaced them with unelected pro-europe puppets. look how they forbade Ireland to have a general election.

now they are dictating to the credit ratings agencies. soon, there will be an EU only ratings agency giving every county triple A status.

can you ever see it stopping. the answer is NEVER. it will grind on regardless of everything until we have a vast federal europe headed by germany. we will end up a part of it as it will be too costly to remain outside. that or become the 51st state (much more preferable).

they are thieves, liers and the most dangerous people on earth.

gagahouse

Hoopie1 wrote: »

Indeed. By all means criticise them for not downgrading early enough or harshly enough, or simply being wrong for a long time, but this is insanity. Besides, some guy at work was telling me that sovereign ratings react to the market more than the other way around, and he used to be a bond trader.

Yes, they are lagging not leading indicators, always. French debt has been trading at below AAA levels for many months now.

It's funny how they criticised them for rating sub-prime CDO's AAA wrongly and now they're criticising them for downgrading euro sovereign credits rightly. It also displays their total lack of understanding of how the market works, thinking the rating is causing their problems or making them worse. No, the rating is simply the confirmation of the verdict the market delivered a long time ago.

Not that that will stop them from establishing their own as WH said as the only one that counts, and when they do, it won't make a blind bit of difference to investors' perception of their crap paper.

thescouselander

To be fair they have been central to this mess we're in. First off they totally underestimated risk during the boom which contributed to the lending spree. Now they're playing games by making announcements regarding downgrades at the worst possible time in order to cause maximum chaos within the markets. They even decided to down grade a country (France) "by mistake" (as if).

There's no doubt in my mind they need a very heavy dose of regulation.

purch

Clearly there is a lot of misunderstanding of what the credit rating agencies are and what they do.

Most, probably wouldn't have heard of them 3 years ago, and now they want to blame them for everything :eek:

gagahouse

thescouselander wrote: »

To be fair they have been central to this mess we're in. First off they totally underestimated risk during the boom which contributed to the lending spree. Now they're playing games by making announcements regarding downgrades at the worst possible time in order to cause maximum chaos within the markets. They even decided to down grade a country (France) "by mistake" (as if).

There's no doubt in my mind they need a very heavy dose of regulation.

Yes they do require regulation but you don't replace crap with more crap.

I don't believe they're 'playing games' , it's obvious they're going to have to downgrade France when it's spread over Bunds has exploded to +150bp. That release was preprepared and some numpty accidentally sent it out early. They got much abuse for that so why would they do that deliberately, they're not exactly trading on it. It's damaged their reputation no end and that plays right into the EU's hands.

Generali

I blame the [STRIKE]Jews[/STRIKE]/[STRIKE]bankers[/STRIKE]/[STRIKE]ratings agencies[/STRIKE]/[STRIKE]defaulters[/STRIKE] scapegoats.

thescouselander

gagahouse wrote: »

Yes they do require regulation but you don't replace crap with more crap.

I don't believe they're 'playing games' , it's obvious they're going to have to downgrade France when it's spread over Bunds has exploded to +150bp. That release was preprepared and some numpty accidentally sent it out early. They got much abuse for that so why would they do that deliberately, they're not exactly trading on it. It's damaged their reputation no end and that plays right into the EU's hands.

I guess that's one explanation. The other explanation might be that they were up to a bit of market manipulation which isn't good for anyone and is also illegal.