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PDR
882220.  Tue Jan 31, 2012 6:08 pm Reply with quote

CB27 wrote:
What the role of G&S appears to be is that they helped Greece "massage" the figures to hide the level of debt and deficit, which meant that credit rating agencies were fooled into giving the wrong ratings.


...and there may be some grounds for suggesting that S&P (et al) were a smidge negligent in not spotting the problem through failing to apply even some basic mathematical tests of reasonableness to the data. It had already been noted within the EU that the greek statistical returns showed distinct anomalies when tested against (for example) Benford's Law (which just looks at the probability distribution of numbers in the least-significant figure of processed statistical data). Whilst this doesn't inherently prove that the data were forged it should have rtripped alarms and caused a deeper investigation, but it didn't.

But having looked at the dates, it's my view that this wouldn't necessarily averted the Euro crisis. I feel the most likely result would just have been to precipitate the crisis up to a couple of years earlier.

PDR

 
'yorz
882221.  Tue Jan 31, 2012 6:11 pm Reply with quote

Again, one agrees. And again: who ordered and paid........

 
PDR
882223.  Tue Jan 31, 2012 6:36 pm Reply with quote

It wasn't me - I ordered the avacado vinegrette followed by the vension bourginion. Are you sure it was our table?

PDR

 
CB27
882235.  Tue Jan 31, 2012 9:23 pm Reply with quote

Ah right, I missed that part of the question.

The answer is fairly simple.

If a Government is looking to sell bonds (which is how debt is packaged) it needs to be rated in order for people to buy them. They might not like doing so, but these Governments are forced to use a recognised agency to attract buyers, which is where the big three come in.

These agencies also make their money by selling their reports on to investment companies (what you see published in the news is a simple summary). These companies will not spend money on these reports if they didn't think they were worth it, so agencies will continue to monitor certain markets/economies to advise of any changes so they can keep their reputation. This means they may occasionally produce reports which are not "solicited" by the country they are reporting on, but they will cover themselves by the fact that they are producing a follow-up report. They are not allowed to make unsolicited reports into companies/economies, so they need to justify their actions.

 
'yorz
882256.  Wed Feb 01, 2012 3:09 am Reply with quote

Okaaaayyyy - so: Moody's one day thinks, "What shall we do today? Let's investigate, say, erm .... Denmark. Yes. Let's do that. We've nothing else to do and our investigators are getting rusty. And let's make some noise".

Personally, one doesn't think it works that way. The question still stands - who is paying these effing bills?

 
PDR
882257.  Wed Feb 01, 2012 3:40 am Reply with quote

Err...the people who buy the reports (like he said).

PDR

 
exnihilo
882344.  Wed Feb 01, 2012 7:34 am Reply with quote

Not strictly related, but have I missed something? What's with the "one" nonsense?

 
PDR
882381.  Wed Feb 01, 2012 8:50 am Reply with quote

There canbe only one...

PDR

 
soup
882437.  Wed Feb 01, 2012 1:12 pm Reply with quote

'yorz wrote:


Personally, one doesn't think it works that way. The question still stands - who is paying these effing bills?


Change that scenario to one of making widgets. Who tells them to make widgets or are they made then sold?

 
'yorz
882456.  Wed Feb 01, 2012 2:13 pm Reply with quote

Quote:
(sorry suze - somebody excitable is breathing down my neck. It's not me being contrary ;)


I hoped me using the word 'one' would make it clear that it wozzunt me who came up with the question. It was the Down-My-Neck-Breather.
(I'm still abroad, BTW).

 
CB27
882487.  Wed Feb 01, 2012 3:28 pm Reply with quote

'yorz wrote:
Okaaaayyyy - so: Moody's one day thinks, "What shall we do today? Let's investigate, say, erm .... Denmark. Yes. Let's do that. We've nothing else to do and our investigators are getting rusty. And let's make some noise".

Not quite.

Denmark will want investors to come in and snap up their bonds as soon as they come onto the market at the best rates possible, and this will only happen if they pay the various rating agencies to report on them. There are plenty of ratings agencies out there, but it you want to be taken seriously you'll use the top three because of their reputation, therefore trust.

In the meantime, various companies will buy up these reports from agencies they trust so they can make an informed decision. For certain specialist areas they may turn to smaller agencies which are better placed, but for the biggest markets they will want to use agencies they trust most.

These agencies want to keep their reputation in order to generate future business, so will continue to monitor the markets they were paid to report on.

If Moodys want to be paid for future reports on Denmark they have to show they are keeping in touch with what's happening now even if it's coming out of their pockets, though they make plenty of profits in the long run.

 
gerontius grumpus
882532.  Wed Feb 01, 2012 7:16 pm Reply with quote

I find it more than a little alarming that the world rates countries' credit worthiness on 1.5 volt batteries.

 
'yorz
901689.  Sat Apr 14, 2012 10:24 am Reply with quote

Wow! So the UK's still AAA-rated.
Quote:
Standard & Poor's (S&P) said the UK Government had the ability to "respond rapidly" to economic challenges as it confirmed both the rating and the country's "stable" outlook. The move comes after rival agencies Fitch and Moody's put the UK on negative outlook


I'm still not sure how one company can come to a conclusion that is diametrical to another one's. Am I wrong in suspecting that perhaps bribery was involved?

 
Spud McLaren
901754.  Sat Apr 14, 2012 4:16 pm Reply with quote

'yorz wrote:
I'm still not sure how one company can come to a conclusion that is diametrical to another one's. Am I wrong in suspecting that perhaps bribery was involved?
Or possibly that nobody really knows what the fuck is going on.

Less flippantly, perhaps one agency gives different weightings from another to the various aspects of a country's performance.

 
'yorz
901758.  Sat Apr 14, 2012 4:25 pm Reply with quote

Possibly, if it were just one other agency. It were two.

 

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