FedUpUSA

“The report concludes that Moody’s and S&P triggered the worst financial crisis in decades.”

Sounds like it was their fault for downgrading, right?  Nope – the rest of the quote is “when they downgraded inflated ratings.“

So…..  We have companies that did the wrong thing originally, then the “downturn” was triggered by un-wronging that?  Uh, no, the original problem was the bogus securities in the first place, which inflated a credit bubble.

This, in turn, allowed the Ponzi Scheme in our broader economy to continue for a couple of additional years, as shown right here:

Has anyone yet stood up in front of the American people and admitted to the intentional distortion and “pumping” of asset prices – including stocks and homes – along with utterly fraudulent “economic output” in the form of allegedly “healthy” GDP that was nothing more than unsound credit issuance?

Nope.  Not one word.  And every single action since, by The Fed, by Congress, by the media – all of it – has been an puerile (and will ultimately be proven futile) attempt to prevent recognition in the economy that must come in the form of contraction of GDP and default of debt that cannot be sustained by actual output.

http://video.cnbc.com/gallery/?video=3000016654

Tickercon 3 was moved to Tickercon 2 yesterday when Obama joined Congress in lying about the deficit, debt, and what he intends to “do about it” (that is, he intends to make it worse, not better.) {See right side-bar here on FedUpUSA.}

Tickercon 2 will be moved to Tickercon 3 if and only if we start to see Congress and the “mainstream media” admit that we must accept the economic correction to clear the system.  If they continue to refuse, and the speech yesterday from Obama makes clear that they have at this point zero intention to tell the truth, I will soon be compelled to change the Tickercon level to 1.

Unfortunately.

The Market-Ticker

Amazing stuff here…

The new law (financial reform) will make ratings firms liable for the quality of their ratings decisions, effective immediately. The companies say that, until they get a better understanding of their legal exposure, they are refusing to let bond issuers use their ratings.

So let me see if I get this right.

The Ratings Agencies get “privileged” access to deal information.  Individual loan data, aggregates, all sorts of stuff that is not released to the potential buyers of a particular issue.

They then issue a rating based on both the known-to-all and the known-to-only-them data.

But they refuse to take responsibility for that rating.

Well now isn’t that special.  The issuers, of course, are unhappy:

Several companies are shelving their bond offerings “indefinitely,” according to Tom Deutsch, executive director of the American Securitization Forum, which represents the market for bonds backed by assets such as auto loans and credit cards. He said he knew of three offerings scheduled for coming weeks that are now on hold.

So these issues are unmarketable without a rating, but the rating has no meaning because the agencies won’t stand behind it – particularly, if it is found that they were negligent in some fashion down the road.

If you think this is the worst bit of circular logic you’ve heard in a while, you’re not alone.  A thing that is only marketable with a rating is obviously only marketable if the rating actually means something. 

If nobody will stand behind their “rating” then in fact there is no rating at all and the issue is unmarketable in the first instance.

I offer my congratulations to the ratings agencies for finally bringing this little inconvenient fact into full public view, and defining themselves not as “ratings agencies” but rather as advertising departments for the major banks, puffery and all.

May they rest in peace.

The Market-Ticker