What would Standard & Poor's gain from downgrading our credit?

[LoZoccolo]

[pnwmom]

1. I wonder what else McGraw Hill owns, worldwide. nt

[Fuddnik]

9. They own United Technologies, formerly General Dynamics.

They lost about 5% of their value today.

[jpgray]

2. Credibility?

:rofl:

My guess is that the push is on for entitlement reform, and some people in finance want to give it an extra shove. S&P is wholly dependent on the big players for fees, and basically exists as a famous name that runs the models banks give to them--but I don't know with any certainty why they did it. You can probably expect someone imagined it was good for business.

If we assume it wasn't political, it is rather difficult to determine what their standard for downgrading or even rating sovereign debt is. Do you know?

[LoZoccolo]

5. If someone said in public "I'm thinking of not paying my bills" would they still be trusted?

[jpgray]

7. Sure! Happens all the time. You notice all those big banks we still have?

[LoZoccolo]

8. What if they said "I'm going to scare you like that again."

[jpgray]

10. By capturing regulators and doing what they please, for example?

Well in that case I imagine the big banks bear no risk of default, and being $2 trillion in size will find many sycophants, including rating agencies, to call their every last tranch a AAA dream. It's like the whole threat of disaster brought on by flagrant irresponsibility never happened, even though it did!

Or are we talking about the US debt again? Hmm, well that's treated more like a disaster that happened, even though it didn't. The disaster there is political. How you decide $1 trillion makes or breaks us when the concern is crazy people blowing up the economy is your point to argue. I'm mystified if it's not simply politics.

[pnwmom]

25. But where are all these nervous people investing their money today? US TREASURIES!

This is the idiocy of the whole thing.

[GodlessBiker]

3. Political access to those who wanted it downgraded.

[LoZoccolo]

6. Who wants it downgraded?

.

[SharonAnn]

11. Those who shorted stocks, those who want to buy assets cheaply, etc.

In other words, greedy people.

[LoZoccolo]

14. Would stocks have kept rising if this didn't happen?

[Fuddnik]

12. The same people who caused the housing collapse.

Poor people. They control everything.

[Sal Minella]

20. Anything that helps make Obama look bad makes McGraw's man

Romney look better.

Not rocket surgery, here.

[GodlessBiker]

32. TPers. There are those who think this needs to happen ...

to make America stumble and fall in order to go back to the way things used to be (before anti-discrimination laws, public education, laws against raping your wife, those kinds of things).

I am convinced there are those in Congress who want America to crash.

[mmonk]

4. Investments in the S&P 500 after entitlement reform?

[grahamhgreen]

13. There are countless ways to game the system. Investing in puts on all the worlds indices would

Be paying out handsomely

[LoZoccolo]

16. If that's so, why not pick a more predictable one?

[mmonk]

18. Yes, you can always place bets.

[mmonk]

15. What did they gain when they rated the worthless CDOs AAA?

[LoZoccolo]

17. I don't know.

[mmonk]

19. They may have could placed bets against them.

[jpgray]

24. Fees!

Even I knew that. Come on, I imagined you must know how they go about rating sovereign debt. Why presume an act of solemn responsibility otherwise from this crowd? Self-interest of some kind would be more reasonable as an explanation, I think.

[mmonk]

30. Yes, it was a conflict of interest.

That is why new rules were proposed to prevent CRAs from issuing ratings on a structured product without underlying asset information disclosed.

[Fuddnik]

23. A WHOLE LOTTA MONEY!

[dkf]

28. Whoever is issuing the CDO pays S&P to rate it.

So it can be sold. There was a definite conflict of interest there.

[lonestarnot]

21. Collection of higher interest rates by richie rich.

[karnac]

22. Maximum CYA for their customers

Granted all 3 major credit rators screwed the pooch during the housing credit crisis. Were far too irresponsible.

By being the first one who is now "TOO" responsible in their credit ratings, the carve out a unique niche for themselves in this market.

Want to play it safe and assure your hedge fund investors of maximum safety? Use the most unreasonably safe credit rating agency.



Unfortunately the others don't want to be left behind. Moody comes to mind.

http://www.globalpost.com/dispatch/news/regions/americas/united-states/110808/moodys-downgrade-deficit-cuts-debt-deal

[dkf]

26. Nothing. It hurts their bottom line too.

[jpgray]

27. Whence will they find relief, I wonder?

:rofl:

[former9thward]

29. Not everything is a conspiracy. Sometimes things are what they are.

[Name removed]

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