Ratings agencies ... helped create the financial crisis. Now, they're deciding the fate of nations.

[marmar]

from the Guardian UK:




How do you rate the ratings agencies?
Their AAA ratings of dodgy securities helped create the financial crisis. Now, they're deciding the fate of nations. What a racket

Dominic Rushe
guardian.co.uk, Thursday 31 March 2011


Remember when your mum told you to stand up to bullies. Not always a good idea, it seems. With economies across Europe now facing meltdown, the credit rating agencies that did so much to help them get into this mess have, according to Reuters, warned the European Commission they may stop rating risky countries. Why? Because the EU has had the temerity to suggest they should be legally liable if their ratings prove to be wrong.

This threat, which would leave weaker European countries struggling to raise cash, comes amid an escalating battle between European officials and the ratings agencies. But it could also mark a turning point for the credit agencies – still under fire for their role in the credit crisis, a moment when these behemoths may finally be called to account.

Relations between the three main credit agencies and the EU hit a new low this week after Standard & Poor's downgraded Portugal and demoted Greece's credit status to below that of Egypt. Not so long ago, credit rating was a staid and not terrible interesting business – few cared what they thought of Greek bonds or Portuguese debt. It wasn't until the 1990s that the agencies started to rule the world. Riding on the back of globalisation and technology, the two grand forces of our age, credit agencies managed to establish themselves as the dominant independent arbiters of risk.

Today, the market is dominated by Moody's and Standard & Poor's, with Fitch running third. The big three rate everything from corporate debt to pension funds to countries – and everybody listens. It's also big business: if you want a good loan, you need a good rating. Last year, Moody's sales topped $2bn. But as their business and influence have grown ever larger, more people are starting to ask who rates the raters? .............(more)

The complete piece is at: http://www.guardian.co.uk/commentisfree/cifamerica/2011/mar/31/ratings-agencies-credit-crunch

[girl gone mad]

1. k & r

[ThomCat]

2. Ah... "Leave us alone or we'll really cause some damage"

Don't you love it when irresponsible companies decide to blackmail the whole world instead of doing what's right?