Pundit Mocks Rating Agencies

May 11, 2012 by · Leave a Comment
Filed under: General, The Rating Agencies 

Writing for CBS Money Watch, columnist Constantine von Hoffman wonders, “Why are ratings agencies still in business?”

He cites two examples. The first is Standard & Poor’s upgrade of Greece’s sovereign debt “from really, really, really bad to merely very, very bad.” He doesn’t believe that Greece deserves a better rating, particularly in light of the then pending Greek elections.

He writes, “On Saturday, Greece will hold national elections in which anyone favoring budget cuts will be lucky not to finish at the bottom of the Aegean Sea.” He also points that markets reacted to the upgrade by driving the yield on Greek Bonds up even higher.

The second example is how the recent downgrade of Spain’s sovereign debt was “shrugged” off by the markets. He explains, “investors have known for some time that the economy there is a train wreck.”

He concludes by pointing out, “the agencies didn’t just miss the boat on mortgage securities, they missed the whole ocean.”

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