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Decline and Fall - Why Would Anybody Believe Standard and Poor's?

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autorank Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Apr-25-11 03:21 PM
Original message
Decline and Fall - Why Would Anybody Believe Standard and Poor's?
Decline and Fall - Why Would Anybody Believe Standard and Poor's?

Michael Collins

(Regarding Standard and Poor's threats to downgrade the sovereign credit rating of the United States of America)

Who in the World Would Trust Standard and Poor's - They Helped Trigger the Financial Collapse

Along with Moody's, S&P abruptly burst the real estate bubble and triggered the 2008 recession. Their downgrading of mortgage backed securities followed years of the highest ratings for these risky financial products. According to a US Senate committee report:

"Although ratings downgrades for investment grade securities are supposed to be relatively infrequent, in 2007, they took place on a massive scale that was unprecedented in U.S. financial markets. Beginning in July 2007, Moodys and S&P downgraded hundreds and then thousands of RMBS and CDO ratings, causing the rated securities to lose value and become much more difficult to sell, and leading to the subsequent collapse of the RMBS and CDO secondary markets. The massive downgrades made it clear that the original ratings were not only deeply flawed, but the U.S. mortgage market was much riskier than previously portrayed." (Author's emphasis) US Senate Permanent Subcommittee on Investigations, April 13 (p. 263)

"S&P Intentionally Underrates Public Bonds"



The heading above is a section title from the 2008 State of State of Connecticut complaint filed against S&P for "unfair and deceptive acts and practices in the courts of trade or commerce within the State of Connecticut."

The Connecticut Attorney General issued the following statement after filing the complaint against S&P:

"We are holding the credit rating agencies accountable for a secret Wall Street tax on Main Street"

"All three credit rating agencies systematically and intentionally gave lower credit ratings to bonds issued by states, municipalities and other public entities as compared to corporate and other forms of debt with similar or even worse rates of default, Blumenthal alleges" Richard Blumenthal, Connecticut Attorney General, July 30, 2008 (Blumenthal is now governor of Connecticut)

Link: http://economicpopulist.org/content/decline-and-fall-wh...
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no_hypocrisy Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Apr-25-11 03:46 PM
Response to Original message
1. As a corollary, why would anyone believe Alan Greenspan anymore?
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autorank Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Apr-25-11 07:40 PM
Response to Reply #1
10. Great corollary
And axiom...Greenspan is not even remotely credible!
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inna Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Apr-25-11 04:01 PM
Response to Original message
2. kickety kick
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ixion Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Apr-25-11 04:09 PM
Response to Original message
3. The entire financial system helped to trigger the collapse, from the Fed on down
to Standard and Poor's and everyone else on Wall St. Then they bailed each other out.

Seems odd to single out one company.
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autorank Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Apr-25-11 07:41 PM
Response to Reply #3
11. S&P is disrupting domestic politics with their credit warning on the USA
You're right, they're all in on it but this is outrageous. Why would anyone listen gto them?

Coburn says it's time to listen when S&P speaks...because he wants to slash everything. Conrad
has his own agenda too (these are quotes in the article at the link). Too much!
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sendero Donating Member (1000+ posts) Send PM | Profile | Ignore Wed Apr-27-11 05:30 AM
Response to Reply #11
29. Do the math..
... see what happens when you have a 14.5 trillion dollar debt and interest rates return to even moderately normal levels.

I know it is not a popular idea around here but there is a point where you cannot even pay the interest on your debt any more and we are perilously close to that point at this very moment.

The can-kicking method of solving problems has never worked when it comes to money and it is not working this time either.

The ratings agencies, EVERY DAMN ONE OF THEM, failed to do their jobs. So did the bank regulators, securities regulators, FNMA, FMAC, and a whole host of alphabet soup agencies.

To say that none of them can possibly make a correct call now is pretty simple minded.
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myrna minx Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Apr-25-11 04:10 PM
Response to Original message
4. K&R, my friend.
:hi:
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autorank Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Apr-25-11 07:42 PM
Response to Reply #4
12. Ola!
:hi:
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jody Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Apr-25-11 04:17 PM
Response to Original message
5. Because they're correct more than 50% of the time? n/t
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autorank Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Apr-25-11 07:42 PM
Response to Reply #5
13. Great idea
We could replace them with a monkey tossing a coin ;) Least the monkey couldn't be bribed.
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jody Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Apr-25-11 07:47 PM
Response to Reply #13
14. And monkeys work for bananas.
:rofl:
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autorank Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Apr-25-11 08:35 PM
Response to Reply #14
16. LOL!
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sabrina 1 Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Apr-25-11 04:36 PM
Response to Original message
6. The bi-partisan Senate Committtee last week said that
they were referring their findings to the DOJ. Their findings showed the Standard & Poors helped in the fraud that collapsed the economy by giving high ratings to assets that were bad. The Committee wants an investigation to find out why S&P among others, did not know that they were assisting in a fraudulent scheme to deceive investors.

Thanks for this thread, I have been waiting for someone in the media to mention Sen. Levin's Committee's findings regarding S&P's role in the collapse but so far, it has not been mentioned.

It looks like they are once again participating in defrauding the public and it is a shame we do not have a DOJ or a media that will even question them.
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autorank Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Apr-25-11 08:43 PM
Response to Reply #6
18. DOJ better act
Ah hmmm... well, it would be great if they did. The committee report was real NEWS. I'm surprised
it's not everywhere but you know...
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Stinky The Clown Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Apr-25-11 06:04 PM
Response to Original message
7. "Give us a trillion dollars in small, unmarked bills or The Economy gets it."
Fucking thugs.

Thanks, Mikey!

:hi:
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Me. Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Apr-25-11 06:41 PM
Response to Original message
8. Why Indeed!
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autorank Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Apr-25-11 08:28 PM
Response to Reply #8
15. Like CNBC
Industry analysts, serving themselves well... a full portoin
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Me. Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Apr-25-11 10:12 PM
Response to Reply #15
20. CNBC is As Fake As Jack Welch
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leftstreet Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Apr-25-11 06:55 PM
Response to Original message
9. K&R
Good article
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Starry Messenger Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Apr-25-11 08:39 PM
Response to Original message
17. k&r
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Agony Donating Member (865 posts) Send PM | Profile | Ignore Mon Apr-25-11 09:02 PM
Response to Original message
19. Republican talking point/scare tactic for those "less than informed" folk
Edited on Mon Apr-25-11 09:03 PM by Agony
...I seen it used with my own eyes...seemed to work just fine on the local "R" sycophants, lapped it right up.

it was clear that this is one of their talking points.

I don't know? do they believe their own talking points?
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Blue-Jay Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Apr-25-11 10:17 PM
Response to Original message
21. McGraw-Hill? Don't they publish textbooks?
I had no idea that they were the S&P parent company.

This is a good conspiracy theory in the making, if you're into that sort of thing.
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sabrina 1 Donating Member (1000+ posts) Send PM | Profile | Ignore Tue Apr-26-11 10:46 AM
Response to Reply #21
22. Yes, and they've made a fortune since Bush's
business program which he had the nerve to call an educational program, NCLB, went into effect. They publish testing material, and continue to profit from the failed NCLB currently being pushed by this administration.
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Kurovski Donating Member (1000+ posts) Send PM | Profile | Ignore Wed Apr-27-11 12:07 AM
Response to Original message
23. Kay and Are.
I was just coming here to post this. I really was. I got sidetracked by a male cheerleading squad.
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Kurovski Donating Member (1000+ posts) Send PM | Profile | Ignore Wed Apr-27-11 12:09 AM
Response to Original message
24. So blackmail is okay now too, huh?
I mean like, for THOSE people.
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Spider Jerusalem Donating Member (1000+ posts) Send PM | Profile | Ignore Wed Apr-27-11 12:11 AM
Response to Original message
25. A better question would be:
why would anyone believe that the Federal Reserve and Treasury can continue printing billions and inflating the dollar, eroding its value on foreign exchange markets, indefinitely, and expect that every new offering of US government debt instruments will be well-subscribed by central bankers from all over the world and particularly China in order to keep allowing it? In what world exactly does that seem like a rational presumption?
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OnyxCollie Donating Member (1000+ posts) Send PM | Profile | Ignore Wed Apr-27-11 12:25 AM
Response to Original message
26. Kick. Too late to rec. nt
Edited on Wed Apr-27-11 12:25 AM by OnyxCollie
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TheWebHead Donating Member (1000+ posts) Send PM | Profile | Ignore Wed Apr-27-11 12:40 AM
Response to Original message
27. remember that in '08
and leading up to it, S&P and the other ratings agencies went out of their way to protect political and corporate interests. It was resisting the downgrade that created the original bubble with the financial sector, not that they were too quick to lower their ratings. In the case of government debt, S&P acknowledging the obvious in relation to the unsustainability of our debt was for them a risky move because their status as a quasi regulator being determined by the fed.

In many ways this mirrors the investment banks who had buy ratings on stocks during the internet bubble when there was no logic in valuations for companies that were making no money. Those willing to put their neck out and issue the sell call when everyone else is doing the standard "buy buy buy" deserves some credit.
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Karenina Donating Member (1000+ posts) Send PM | Profile | Ignore Wed Apr-27-11 05:25 AM
Response to Original message
28. That IS the question, Michael.
I don't know, in light of their transparent corruption and manipulation, WHY ANYONE gives them any credibility AT ALL :freak:
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mmonk Donating Member (1000+ posts) Send PM | Profile | Ignore Wed Apr-27-11 05:32 AM
Response to Original message
30. Good one.
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