Is Moody's a trojan horse rather than a rating agency?

Well spotted!

There was a time when rating agencies were shadowy organisations basking in relative obscurity. Not anymore. Each of these soothsaying outfits pops up on a regular basis to pontificate about countries and companies. The more they say things the more things get worse.

The Daily Telegraph reports Paul Richardson, of Surrey-based Concept Financial Planning, saying, "Consumer confidence is already weak but what Moody's has done could make things even worse. The Chancellor has done his best to reassure savers, saying he is confident that British banks are well capitalised. But many savers will immediately feel more exposed on the back of this news. That Moody's insists that these downgrades do not reflect a deterioration in the strength of the banking system is irrelevant. This is all about perception and the perception will only be bad. Moody's will have its reasons, of course, but many will see this mass-downgrade as an overreaction - and one that could do the banks and the country serious damage if it causes panic."

So now the British government has to waste its time calming the people who are already minded to keep a tight rein on their spending. Fear about job losses is probably far more irrational than rational, but it permeates most of us. Moody's has just given us more to chew over. Are they trying to break the British economy? They surely aren't helping it.

It's like a trojan horse coming into the yard, except that this horse has all its weapons on the outside. Do we need to be bothered by them? If David Buick of BGC Partners is anyone to go by the answer is - "NO!"

And I've found this on the net which I think makes for interesting reading. 

MOODY'S ANALYST BREAKS SILENCE: Says Ratings Agency Rotten To Core With Conflicts

How rotten we can only guess, but the smell of roses may not be filling the air!

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Downgrading Moody's

It's all a game really!

The general opinion in Britain is that the rating agency Moody's should get a good dose of downgrading itself. This is the oufit that seemed to think selling toxic loans was a good thing for the financial world. Dirt poor people on welfare being given sub-prime loans! They used to say you couldn't make it up. Now it's all made up and sold to us as kosher policy. Ratings agencies indeed! They couldn't rate a kettle for performance.

So Moody's has downgraded the credit rating of 12 UK financial firms including Lloyds TSB, RBS, Nationwide and Santander UK. The agency said it now believed the UK government was less likely to support some firms if they got into trouble. However, the firm emphasised that the downgrades did not "reflect a deterioration in the financial strength of the banking system".

The system is strong but the government is weak, is that it? If the banking system is so strong how come these banks might get into trouble? All that Moody's is telling the world is that they reckon taxpayers might get the hump if another bailout is required. And you need Moody's to tell you that?

Shysters - one and all!

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Should Moody's be downgraded?

I saw Raymond NcDaniel, the Chairman & CEO of Moody's, being quizzed by the venerable interrogators of this financial committee, the FCIC, looking into the banking crisis and all things connected with it. When asked if any due dilligence was done over the subprime fiasco, McDaniel looked somewhat perplexed. After a bit of waffle, I think the answer was a basic no. It was likened to just going through the accounts of the Dairy Queen rather than sipping the blizzards on offer. Warren Buffet was sitting next to him, and Buffet owns the Dairy Queen.

Moody's have made a mint making rating the creditworthiness of other peoples' businesses their own business. They even take a considered opinion of the state of countries. They don't rate Greece too highly at the moment. They've just notched them down another peg. But what is the real purpose of Moody's and others like them? How come they were so undue in their own dilligence when it came to the subprime racketeers? Is it because McDaniel hadn't heard the word "derivative" before? This fancy word conjured up by bankers in order to turn bad money into good.

I like the way the questioning went, but I doubt it will do much. Both McDaniel and Buffet came across as completely devoid of any real sense that this financial disaster was much to do with them. And that's the problem. They don't really live in the real world. Far better for the committee to go down to the local Dairy Queen and ask the blizzard sippers what they would do to straighten things out. Now that's direct democracy for you!

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