How the USA responds to Bad Credit Ratings

lukep

lukep

He Hath Arisen
Sep 18, 2010
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On the blockchain
I'm sure most of you heard about the big three Ratings firms (Moodys, S&P's, Fitch) downgrading the USA's AAA+ rating one notch last August. Obomba even made a big speech about how he was sure we were still a AAA+ country at heart... Awwwww.

What the news hasn't been telling you about is the OTHER official debt rating firms, called NRSROs giving the USA even worse ratings... Especially the one with the highest accuracy history: Egan-Jones...


Egan-Jones downgraded the credit ranking of the USA FOUR TIMES in the last two years!


Apparently Obomba and the SEC weren't too thrilled about that. On April 24 2012, just after their 3rd downgrade, the SEC charged them with numerous petty offenses, and threatened Mr. Egan with jail time for them!

His lawyer has denied all wrongdoing, stating:

Wikipedia said:
"it’s clear the SEC has a bias against independent firms" noting that the SEC was using "hyper-technical" claims and that "these filings, new forms started in 2007, are subject to significant interpretation," and that "the firm used good faith and answered [questions on the forms] as best as it could."

He went on to note that "not one word in the [SEC's order] questions the quality, integrity and timeliness of the Egan-Jones ratings" and criticized the SEC for failing to take action against major NSROs which had "inflated their structured debt, rated junk AAA, and brought down the American economy, according to Congressional reports."
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After that, the SEC struck a deal with them which basically said: 'Shut up about the USA debt for 18 months and we won't stick you in the pokey.'

Egan-Jones Barred from Certain Ratings - WSJ.com

WSJ said:
The SEC said Tuesday that Egan-Jones couldn't officially rate bonds issued by countries, U.S. states and local governments, or securities backed by assets such as mortgages, for at least the next 18 months.

The ban was part of an agreement the SEC reached with Egan-Jones and its president, Sean Egan, to settle charges that they filed inaccurate documents with the regulator in 2008. The SEC alleged that Egan-Jones misled investors about its expertise, and that Mr. Egan caused the firm to violate conflict-of-interest provisions.
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In case you aren't familliar, NRSRO's are very well-vetted firms approved by the SEC and congress itself to rate debt for all investors. All 9 of these NRSROs, all highly vetted out the wazoo... Our currently financial system as a whole depends on their every rating... So this is clear proof that the SEC itself who approved them, tried to shut them up when they said our ability to pay debt isn't very good anymore.

Not to mention the fact that 99.9999% of the world thinks that we've only been downgraded once. Thanks MSM!
(There was barely a mention in the MSM at all that S&P was under investigation afterwards.)

This is bullying at its' most obvious... I've been telling you guys for a long time here, the clock is ticking until the dollar is worthless.

Looks like now we have a good idea of when that will happen: In 18 months... Mid 2014.

I'd guess that the SEC feels that the reality will be so bad by mid 2014 that they don't care what this NRSRO says about them.

I'll leave off with a few words from today's Sovereign Man on the subject:

Simon Black said:
For years, major rating agencies (S&P, Moody's, and Fitch) have championed the outright fraud of our financial system by pinning pristine credit ratings on insolvent governments and their heavily inflated currencies.

In doing so, the rating agencies are effectively claiming that the greatest debtor that has ever existed in the history of the world is nearly 'risk-free'.

Clearly this is a ridiculous assertion. With a debt level over 100% of GDP, the US is so broke that the government must borrow money just to pay interest on the money it's already borrowed. They've lost over a trillion dollars a year since 2008, yet they still spend money on things like drones and body scanners. It's crazy.

As with any good scam, the government must maintain public confidence. The moment someone says 'the Emperor has no clothes,' that shallow, fragile confidence will come crashing down and expose the scam. Dissent must be vigorously and swiftly pursued.

So when S&P finally downgraded the US one notch in August 2011, the SEC and Justice Department announced that S&P was under investigation, just two weeks later.

Egan-Jones, a smaller rating agency, has been even more aggressive, downgrading the US credit rating three times in 18 months. And while the federal government may not have imposed Diocletian's death penalty, they are just as willing to squash dissent.

In a country that churns out thousands of pages of new regulations each week, it's easy to find a reason to go after someone. As you read this letter, in fact, you are probably in violation of at least a dozen regulatory offenses.

In the case of Egan-Jones, the SEC brought administrative action against the agency within two weeks of their second downgrade. And a few days ago, the case was settled.

I'm sure you have already guessed the ending: Egan-Jones is banned from for the next 18 months from rating US government debt. They've effectively been silenced from telling the truth.

The lesson here is obvious. Just as in Roman times, bankrupt nations today will stop at nothing to keep up the scam just a little bit longer.

Given that all this is happening at a time when Congress is voting to suspend the debt ceiling entirely, these actions are the clearest sign yet of just how desperate the government has become.

Could the warning signs be any more obvious?
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I have never seen a web-community so bound together by their political circlejerks, this is awesome.
 
grieve said:
I have never seen a web-community so bound together by their political circlejerks, this is awesome.
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1. This isn't political at all; It's anti-state.
2. It was more of a typical warning cry than a circlejerk... Dchuk is sure to come in here before long and argue the contrary position. ;)
 
niceass6.jpeg
 
Read "The Big Short" by Michael Lewis and you will realise what a crock of shit the output of ratings agencies is.

[ame="http://www.amazon.com/gp/aw/d/0393338827"]The Big Short: Inside the Doomsday Machine:Amazon:Books[/ame]
 
I work for Barry Ritholtz and he recently made some good points on the SEC's selectivity.

No word on when similar conflict of interest charges are coming for Standard & Poor’s Ratings Services or Moody’s Investors Service for similar misleading, conflicted and otherwise compromised ratings.

The major credit rating agencies were the prime enablers of the credit crisis. They put Triple-AAA ratings on securitized sub-prime mortgage bundles, primarily because they were paid by the underwriters to do so. But for those actions, much of the securitized junk would not have been able to be purchased by the many bond funds, pensions and other large institutional investors mandated to buy only Investment grade paper. (The bond markets eventually figured this out and has learned to ignore the ratings agencies commentary as conflicted and corrupt). Thus, what should have been a tiny, high risk corner of the mortgage market instead became an enormous, A-rated, mainstream asset class for yield hungry fixed income managers. This is why S&P and Moody’s are thus amongst the prime causes of the financial crisis of 2008-09.

The markets, bond and otherwise, don't hang with bated breath on gov't reports like they used to (inflation, unemployment, etc.) because of how political these departments have become.
 
It's hard to feel bad for these guys. Yes it might be a personal vendetta. And much as I dislike 99% of political figures, these scum deserve no lenience. In any just system all these credit rating agency guys would be round up and shot.

They were the ones saying debt packages assembled from margarita ville securities were AAA+ - That is a big part of why we are in the mess we are in. Not that this isn't a case of the pot calling the kettle black. But if any of these fucks tear each other to pieces, I'm going to be happy, not for the winning side, but just to watch the losing side lose.

[ame="http://www.youtube.com/watch?v=egRgweL12Uc"]Entropy fan - YouTube[/ame]
 
greenleaves said:
It's hard to feel bad for these guys....

these scum deserve no lenience. In any just system all these credit rating agency guys would be round up and shot...

... if any of these fucks tear each other to pieces, I'm going to be happy, not for the winning side, but just to watch the losing side lose.
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With Four downgrades in the past two years, despite the obvious asswhooping they were risking doing so, don't you feel Egan-Jones deserves a little bit of credit? (no pun intended)

Are you sure that they rated the margaritaville securities AAA+?

Even if they did so way back then, it's clear that they seem to have grown some sort of conscious 2 years ago.
 
lukep said:
With Four downgrades in the past two years, despite the obvious asswhooping they were risking doing so, don't you feel Egan-Jones deserves a little bit of credit? (no pun intended)

Are you sure that they rated the margaritaville securities AAA+?

Even if they did so way back then, it's clear that they seem to have grown some sort of conscious 2 years ago.
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Ah yes, it is conscious they grew. Not self interest.

Sorry, when an nasty little shit goes up against a nasty big shit, and the nasty big shit squashes the nasty little shit, I ain't shedding no tears. Fuck 'em. They are both out for their self interest. And I'm not much better. But at least I'm not self diluted or hypocritical in claiming otherwise.

I'll celebrate the destruction of whoever loses. Not because I root for the winner, but because I can get a perverse vicarious joy from watching the loser go down.
 
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