Monday, June 14, 2010

Junk rating

June 15 (Bloomberg) -- Greece’s credit rating was cut to non-investment grade, or junk, by Moody’s Investors Service, threatening to further undermine demand for the debt-strapped nation’s assets as it struggles to rein in its budget deficit.
In making the four-step downgrade to Ba1 from A3, Moody’s cited “substantial” risks to economic growth from the austerity measures tied to a 110 billion-euro ($134.5 billion) aid package from the European Union and the International Monetary Fund. The lower rating “incorporates a greater, albeit, low risk of default,” Moody’s said in a statement yesterday in London. The outlook is stable, it said...
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Comment: Even a short investigation into the history of these rating agencies will teach you that more than Greek bonds, the ratings itself are junk. It is only their ignorance of the guys (& girls) who write these junk assessments that is surpassed by their arrogance. One is reminded of what once said about August Comte: It is well known that Comte was a madman, but what about his followers? This is not the only thing that Comte and the rating agencies have in common. Interestlingly enough, Moody's, S&P, and Fitch use Comte's positivist methodology which is already by itself a sign of madness.

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