Moodys: Another US Credit Rating Downgrade is Nigh

[oldfart]

Would these Moody geniuses be the same Moody geniuses who gave all those Real Estate derivative bonds AAA ratings?

Their credibility is somewhat in tatters, don't you think?

That's the big problem for S & P, Moddy, and Fitch. If they downgrade a security and the market is unaffected, it implies that either ratings are irrelevant for American sovreign debt (which I believe is true due to it's status as a global reserve currency) or that markets don't believe the rating agencies pronouncements are reliable and valid. Neither view helps the rating agencies. They make money by charging bond issuers for issuing ratings, but the Treasury pays no such fee. The rating agencies benefit only in that their ratings, if sustained by the market, enhance their reputation in a self-reinforcing cycle which allows them to charge other bond issuers. So if they are wrong on Treasury debt, why assume they are right on State of Arizona Moonport Revenue bonds?

 

[Rshermr]

Would these Moody geniuses be the same Moody geniuses who gave all those Real Estate derivative bonds AAA ratings?

Their credibility is somewhat in tatters, don't you think?

That's the big problem for S & P, Moddy, and Fitch. If they downgrade a security and the market is unaffected, it implies that either ratings are irrelevant for American sovreign debt (which I believe is true due to it's status as a global reserve currency) or that markets don't believe the rating agencies pronouncements are reliable and valid. Neither view helps the rating agencies. They make money by charging bond issuers for issuing ratings, but the Treasury pays no such fee. The rating agencies benefit only in that their ratings, if sustained by the market, enhance their reputation in a self-reinforcing cycle which allows them to charge other bond issuers. So if they are wrong on Treasury debt, why assume they are right on State of Arizona Moonport Revenue bonds?

Amazing how a really rational and well stated post sends the nuts into hiding. Nice job, Oldfart. You obviously know your stuff in this economic area.

 

[EdwardBaiamonte]

neither you nor Ed have any comment on te observation that bond markets do not seem to support his position.

what position exactly?????????????

 

[EdwardBaiamonte]

If you read these studies,

of course if conservative libertarians like Jefferson and Friedman were stupid you would not be so Afriad to say why. What does your fear tell you about your IQ and character?

 

[oldfart]

neither you nor Ed have any comment on te observation that bond markets do not seem to support his position.

what position exactly?????????????

I have re-read your post (number 9 in this string) and you are absolutely correct. It does not contain any position as to the direction of interest rates or the cause of interest rate changes whatsoever. I apologize for implying you had a posiion on these matters when in fact you did not.

 

[EdwardBaiamonte]

neither you nor Ed have any comment on te observation that bond markets do not seem to support his position.

what position exactly?????????????

I have re-read your post (number 9 in this string) and you are absolutely correct. It does not contain any position as to the direction of interest rates or the cause of interest rate changes whatsoever. I apologize for implying you had a posiion on these matters when in fact you did not.

too stupid!! Interest rates are the price of money. The liberal idea is to print money to hold interest rates low so people can borrow easily to stimulate the economy. This is what quantitative easing and operation twist are all about.

To bad they didn't think of it in the stone age. They could have printed tons of money and skipped centuries of slow economic growth.

IN reality its exactly as Angela Merkel says: growth requires freedom and entrepreneurial activity, not idiotic liberal magic."

Welcome to Econ 101, class one day one.