Why S. & P.’s Ratings Are Substandard and Porous

[nhboy (Premo)]

LINK

"Five years ago, if you were an investor looking for guidance on which country’s debt was the safest to invest in, Standard & Poor’s ratings wouldn’t have done much to help you navigate the headwinds of the financial crisis.

Investors now think that Ireland has more than a 40 percent chance of a default or debt restructuring at some point in the next five years. The country is penalized with double-digit interest rates when it wants to borrow money. But in 2006, Standard & Poor’s had Ireland’s debt rated with its top-of-the-line, AAA rating. It didn’t downgrade Ireland until March 30, 2009, long after its financial problems had become obvious, and the price to buy insurance on its debt had increased tenfold from a year earlier.

Spain, which markets now posit has about a three-in-ten chance of default or restructuring, also had a AAA rating, which it maintained until January 2009. Today it still has a AA rating, one notch higher than Japan’s.

Iceland, the tiny country with the oversized banking sector that came perilously close to national bankruptcy, was in 2006 rated AA+, the same rating the United States now has.

Greece, which now appears more likely than not to endure at least a technical default, had debt rated A, lower than most European countries but a reasonably good grade by world standards. It too was not downgraded until January 2009, and its bonds were still rated as investment-grade until March 2010.

Although Standard & Poor’s assigns ratings based on a series of letter grades, they can easily be translated into a numerical scale — sort of like the way that letter grades in high school are translated into a grade-point average:"

[hvp05]

Good job discrediting S&P, nhboob. Everyone can see our economy is bustling; we just need to eliminate the rating agencies trying to give a bad impression then we can enjoy our bountiful economy in peace.

[bcp (Premo)]

obama and the democrats are still total un-American socialist idiots though right?

[ylexot]

So what you are saying is that S&P's downgrades historically come later than they should have. What does that tell you about their downgrade of the US? Could it possibly be that they are late yet again?

[Gilligan (Premo)]

Originally Posted by ylexot

So what you are saying is that S&P's downgrades historically come later than they should have. What does that tell you about their downgrade of the US? Could it possibly be that they are late yet again?

That was what I took away from it.

[hvp05]

Originally Posted by ylexot

So what you are saying is that S&P's downgrades historically come later than they should have. What does that tell you about their downgrade of the US? Could it possibly be that they are late yet again?

You want late? This is late...

S&P Downgrades Credit Ratings for Fannie Mae, Freddie Mac, Others Linked to U.S. Debt

Officials at Standard & Poor’s are downgrading the credit ratings of mortgage lenders Fannie Mae and Freddie Mac and other agencies linked to long-term U.S. debt.

[Pete]

Silence the dissenters!