Reply to: UK's AAA credit rating threatened by 'formidable challenges'

[centurian]

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 is right, although it is hard to find very precise examples, because there is often no law with specific wording - laws are drafted to give regulatory authorities (FSA/SEC etc.) the power to issue binding guidelines.

Banks are forced to hold capital of certain ratings under Basel II arrangements - the exact details left to individual countries regulatory authorities

Pension or investment funds marketed as "safe" must hold assets rated at a certain level by a designated number of ratings agencies.

But when an asset gets downgraded, it can be very hard to determine if sellers jumped or pushed.

[aussielong]

You have a very clear chance to turn me over here, all you have to do is back up your statement and I am not going to ask for many as you stated. Just one.

Mind you, you are the pumpkin that told us all that twitter was down 50% of the time. The one billion link virgin strike again.

He's right in a way. eg. Any bank that has its rating downgraded will immediately have to post more collateral on its debt. This can cost them mightily.

[AtW]

minestrone's post was hidden because his IQ is below set limit of 50

[minestrone]

All you have to do is to deposit £10k+VAT and I'll consider your offer.

Actually make it £20k+VAT because dealing with idiots like yourself in my opinion requires extra efforts and patience.

I am downgrading you to a c- poster.

[AtW]

You have a very clear chance to turn me over here, all you have to do is back up your statement and I am not going to ask for many as you stated. Just one.

All you have to do is to deposit £10k+VAT and I'll consider your offer.

Actually make it £20k+VAT because dealing with idiots like yourself in my opinion requires extra efforts and patience.

[minestrone]

When you deposit £10k+VAT (@ 20%) into escrow then I'll consider your offer, until then go do your own research.

You have a very clear chance to turn me over here, all you have to do is back up your statement and I am not going to ask for many as you stated. Just one.

Mind you, you are the pumpkin that told us all that twitter was down 50% of the time. The one billion link virgin strike again.

[AtW]

"many organisations are forced to buy or sell on the basis of ratings"

I am just asking you to give me one organisation.

Just one.

one

1

When you deposit £10k+VAT (@ 20%) into escrow then I'll consider your offer, until then go do your own research.

[minestrone]

I'll consider doing it for £10000.00+VAT

"many organisations are forced to buy or sell on the basis of ratings"

I am just asking you to give me one organisation.

Just one.

one

1

[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

[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.

[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.

[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:



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.

[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.

[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.