

Moody's lowers EU rating outlook to 'negative' - tatianajosephy
http://www.bbc.co.uk/news/business-19472857

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Tichy
Didn't Moody also give AAA ratings to those junk bonds that triggered the
housing crisis? I think all the rating agencies did?

So why are we listening to them again?

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hessenwolf
Yes. S&P, Moody's & Fitch seem to have the collective IQ of a kidney bean.

Then you have trillions in pension funds shifting overnight because government
regulations depend on the output of these rating agencies. You could shift
regulation away from these, but maybe you might have your national debt
downgraded? Ratings agencies pretty much terrify governments.

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sasoon
What kind of organization is Moody's? Who watches them? Who made them
qualified to issue ratings? Are they accountable for their ratings? Why would
anyone listen what they say?

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ghshephard
[http://en.wikipedia.org/wiki/Nationally_Recognized_Statistic...](http://en.wikipedia.org/wiki/Nationally_Recognized_Statistical_Rating_Organization)

What kind of organization is Moody's? - They are an NRSRO.

Who watches them? Who made them qualified to issue ratings?

"The U.S. Congress passed the Credit Rating Agency Reform Act of 2006, Pub.L.
109-291, 120 Stat. 1327, enacted September 29, 2006. This law required the SEC
to establish clear guidelines for determining which credit rating agencies
qualify as NRSROs.

Are they accountable for their ratings?

"In February 2009, the SEC promulgated amended regulations designed to address
concerns about the integrity of the process by which NRSROs rate structured
finance products,"

Why would anyone listen what they say?

"A Nationally Recognized Statistical Rating Organization (NRSRO) is a credit
rating agency (CRA) that issues credit ratings that the U.S. Securities and
Exchange Commission (SEC) permits other financial firms to use for certain
regulatory purposes....SEC regulations also require that money market funds
(mutual funds that mimic the safety and liquidity of a bank savings deposit,
but without Federal Deposit Insurance Corporation insurance) comprise only
securities with a very high rating from an NRSRO. Likewise, insurance
regulators use credit ratings from NRSROs to ascertain the strength of the
reserves held by insurance companies."

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johnchristopher
So if I read correctly it's a US organisation, controlled by the SEC, giving
european countries, UE and other structured financed products (is that
novlangue for "country" ?) a note to estimate the financial credit reserve of
said products.

Are there such european credit rating agencies giving notes to California or
Kentucky ? We never hear about those on this side of the ocean :(

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digitalengineer
There are plans to set up European Agency's. Mainly to add balance to the US
colored ratings.

For now you could also check the Chinese Rating Agency: "The Dagong Global
Credit Rating Company, which lowered the United States to A+ last November
after the U.S. Federal Reserve decided to continue loosening its monetary
policy, announced a further downgrade to A, indicating heightened doubts over
Washington's long-term ability to repay its debts."
[http://edition.cnn.com/2011/BUSINESS/08/02/china.us.rating/i...](http://edition.cnn.com/2011/BUSINESS/08/02/china.us.rating/index.html)

Funny, communists lowering a credit rating because it's too socialist (Keynes
and loose money policy).

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digitalengineer
I think they're right. The EU as it stands today will certainly add to a
deeper new recession. However: They are highly selective in their ratings.
They focus on the EU and seem to 'forget' the US (and Great Britain). Both are
also deeply in debt and both have no plans to even reign in their spending.

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yarrel
Even some previously supportive economists now think that the UK's current
right-wing government need to refocus on encouraging growth. They won't,
though. This is class war not economics.

The UK is part of the EU, although not part of the Eurozone (thanks, Soros!).

And the US is doing better than the UK to the extent that it is focussing on
growth more than on tax cuts for the rich.

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digitalengineer
"Refocus on encouraging growth" is fine. Disturbing markets with political
preferences for 'this or that' is not fine and will deepen the recession.

