Unchanged, unpunished, unrepentant, unreliable:: Ratings agencies – authorised to take money under false pretences


A closeup taken on December 31, 2011 in Lille, shows triple

The two biggest rating agencies refused to say sorry for their role in the financial crisis that began in 2007-08, instead telling MPs that investors should not pay too much attention to what they say.

"Ratings are opinions. They are one piece of important information which is available to the market and investors, but there are many other pieces of relevant information around about credit decision making," Mr Crawley said.

"We have been clear that we do not expect an individual investor, or at the other end of the spectrum a sophisticated asset manager, to rely solely on what we provide."

Mr Taylor said that although ratings were a good indication of long-term credit worthiness, there was no guarantee that agencies would not miss things in the future.

"We don’t have a crystal ball. We can’t predict the future.

Ratings agencies Moody’s and Standard & Poor’s refuse to apologise to MPs for financial crisis

The simple truth is that, ANYONE who thought that Rating Agencies actually could predict the future, should have their shoelaces and belt removed immediately! The more complex version…that is no less truthful…is that no-one can predict the future, even with access to an infinite amount of data about the present or immediate past.

I am not sure whether I find their arrogance or ignorance more offensive and, in the view of their role in the financial crisis, wonder why their “opinions” still so sought-after and costly?

At Ontonix we offer a credible, quantitative, cost effective [on-line] alternative:

Ontonix: Ratings – From an Opinion to Science

   

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Rating Agencies Fail


Glad to see that the Rating Agencies are (yet again) in the headlines for all the “right” reasons…of course this is only my “opinion”!

Politics has still not realized the mistake that was made: Adopting that mindset. For the trader in his hyper-competitive market, his psychopathic behaviour makes perfect sense. For a society, it is pure cancer. As one German entertainer put it nicely:

I’d like to know if she [german chancellor Merkel] has a market-compliant democracy in mind. And if so, I’d like to know if she’s also thought about a democracy-compliant market.

via Rating Agencies Fail | Free Everything.

 

Ontonix: Ratings – From an Opinion to Science


In January 2011 The Financial Crisis Inquiry Committee claimed that “The three credit rating agencies were key enablers of the financial meltdown”. Failing investment banks and large corporations enjoyed investment-grade ratings days before collapse.

Rating agencies claimed that ratings represent a mere opinion. And this is precisely the problem. Rating agencies represent a fundamental source of information for investors. Investors will evidently tend to invest in assets that are judged as investment-grade rather than junk. However, the First Amendment of the U.S. Constitution protects “publishers” guaranteeing them the freedom of speech.

A method of rating does not have to be perfect (is financial data 100% accurate?). But it has to be consistent. Serious science starts with consistent measurements. You can always improve a metric, make it more accurate, but you must use it consistently. If you don’t then mathematics indeed becomes an opinion and we don’t want that. Read more of this post