UK's AAA credit rating threatened by 'formidable challenges'

[minestrone]

I can't remember high profile case when rating agencies did not act post factum - when problems actually happened and their downgrades only make matters worse causing massive damage in what often could have been salvageable situation.

Same goes for IMF and World Bank - usually getting involved when it's too late and it become necessary to bail out Western banks who loaned money by providing "credit" to countries that gone bust.

In theory it's free choice to use those agencies or not, problem is that they became so widely used and have so little competence and responsibility that they are only convinient to short term dirty spekulants.

<----------------------- Now do the needful

I don't think you actually understand what a rating is, advice given.

[AtW]

It's easier than that - ignore them if you don't like them.

I do not use them or trust them, but many organisations are forced to buy or sell on the basis of ratings - even more private "investors" act like sheep when they read in the news about ratings.

[minestrone]

I do not use them or trust them, but many organisations are forced to buy or sell on the basis of ratings - even more private "investors" act like sheep when they read in the news about ratings.

OK pinhead, can you back that one up.

I think you are talking complete crap here.

[AtW]

OK pinhead, can you back that one up.

I think you are talking complete crap here.

Learn how to read:

Because they are a cartel supported by an SEC mandate which dictates that securities have to be rated by a Nationally Recognised Statistical Rating Organisation (NRSRO), and "annoints" the current big 3 as such - in other words they are only in business because of a piece of legislation (from 1975):

Mish's Global Economic Trend Analysis: Time To Break Up The Credit Rating Cartel

Just like when company drops off FTSE 100 it causes a fair few funds to sell shares because they have policy to invest into FTSE 100.

Perhaps the solution should be demanding that companies that make ratings idemnify from losses those who use them to make investment decisions - large deposits will be required, after that we'll see how many of those ratings companies will survive - zero.

[Freamon]

There are some funds (e.g. fixed income investment funds, that people might hold as part of a pension, for example) that are managed on the basis that they only ever invest in AAA rated securities. Whether a particular fund would sell an asset automatically as the result of a downgrade depends on the fund and the fund management. Some will have the rule written into their prospectus, so if they don't sell when an instrument is downgraded their investors could later sue them.

[minestrone]

Learn how to read:



Just like when company drops off FTSE 100 it causes a fair few funds to sell shares because they have policy to invest into FTSE 100.

Perhaps the solution should be demanding that companies that make ratings idemnify from losses those who use them to make investment decisions - large deposits will be required, after that we'll see how many of those ratings companies will survive - zero.

Numbskull, I am asking you to provide evidence that organisations are forced to buy or sell on the back of ratings. You claimed it now back it up.

[AtW]

Numbskull, I am asking you to provide evidence that organisations are forced to buy or sell on the back of ratings. You claimed it now back it up.

Learn how to read, all necessary information is posted above.

[minestrone]

Learn how to read, all necessary information is posted above.

FFS, one organisation, it is all I am asking, you claim many, I am just asking for one.

[Freamon]

In actual fact this is all rather academic, rating agencies are just the tail - the dog is the market. By which I mean, by the time the rating agencies actually downgrade something, all the actively managed funds will have already sold it as they've anticipated the downgrade long in advance.

You can see this just by looking at the price action in instruments which have subsequently been downgraded. In a lot of cases, the rating agencies actually use the fall in prices as their cue to downgrade.

[AtW]

FFS, one organisation, it is all I am asking, you claim many, I am just asking for one.

I'll consider doing it for £10000.00+VAT