Ontonix:: how to correct ratings (or how to stop the manipulation)

When war is just too “dangerous” for the financial masters of the universe (even when their political puppets crave it) i.e. when the bankers aren’t able to effectively bankroll both sides, or the outcome is likely to be detrimental to their ability to retain power in a post-critical landscape – NOTHING to do with the number of innocent victims – their most effective means of waging war is to manipulate global finance!

We have already seen the US pursue a high risk QE strategy, aimed at retaining the, once mighty, USD as the currency of international trade, despite the fact that the American economy is shot (sic). In the unlikely event that one of the Middle East powers had attempted such bully-boy tactics they’d have been, swiftly, sorted out. So perhaps us Europeans should be thankful that we aren’t perceived as such a threat!!?

Nobody pays for a sovereign rating. It comes for free, at an agencies discretion. So, while the agencies decide to favour some countries, they try to discredit others. Ratings have become instruments of politics and strategy, and also weapons in an economic war. The lower the rating, the more it costs a government to sell bonds as it must pay higher interests rates. A downward rating spiral may kill even the healthiest of economies…

What rating agencies do not take into account is the resilience (the opposite of fragility) of an economy. A company/country can perform well form  a purely financial perspective but still be fragile. This new aspect of business can easily be taken into account. The same balance sheet, income and cash flow statements can be used to compute the resilience of a company to measure the resilience of its business structure. Once you have the conventional PoD rating and the Resilience Rating™, which ranges from 0% to 100% (100% means the business is very resilient and stable, 0% it is dominated by chaos) you simply multiply the two to obtain a Corrected Rating:

Corrected Rating = PoD Rating X Resilience Rating

This is clear in the image below, which puts together the two

Ontonix – Complex Systems Management, Business Risk Management.

U.S. Financial World War: Bernanke defends QE2

I thought that this story may have a bit of life in it! Particularly if you subscribe to the view contained in the original article (Why (and how) the U.S. Has Launched a New Financial World War ) rather than naively go along with what is pushed out from Bernanke and the usual media channels.

Below is the word from the Beeb but I was also very interested to read this piece

The truth is, Quantitative Easing will not reduce unemployment, narrow the output gap, or increase aggregate demand. At best, it will lower long-term interest rates (slightly) and buoy asset prices. That may be good for the stock market, but it won’t lay the groundwork for a strong recovery. In fact, it might not even be enough to keep the economy from slipping back into recession.

BBC News:

Germany, China, Brazil and South Africa have criticised the US plan, with the German Finance Minister Wolfgang Schaeuble saying it was “clueless” and would create “extra problems for the world”.

China’s Central Bank head Zhou Xiaochuan has urged global currency reforms, while South Africa said developing countries would suffer most.

South Africa’s finance minister Pravin Gordhan warned that “developing countries, including South Africa, would bear the brunt of the US decision to open its flood gates without due consideration of the consequences for other nations.”

The US policy “undermines the spirit of multilateral co-operation that G20 leaders have fought so hard to maintain during the current crisis,” he said.

The heads of state and government of the G20 group of the world’s leading nations is due to meet in a week in South Korea, with currencies and trade imbalances high on the agenda.

via BBC News – Fed\’s Bernanke defends new economic recovery plan.

U.S. Financial World War Phase 2: The ‘Wall Of Money’: A guide to QE2


I don’t claim any great expertise but I do, at least, understand the “publicised” intention of QE2. When I refer to the publicised version I mean the one for general [public] consumption. But, by now, we should all be vey well aware that when it comes to Governments and economic policy there tends to be a hidden agenda!

I can’t help but think that this is more about the once mighty dollar trying to fix debt with debt whilst putting pressure on other major currencies and adding further “energy” into the bubble that has been institutionally inflated since the effective collapse of global banking. Surely “market value” is a bit of a sick joke that only supports the balance sheets of those with the most amount of toxic debt on their books…

Support for “the market” rather than for US or global citizens.

Why do I have the feeling that the outcome will be lots of “I’m alright Jack” short term winners in the financial sector with even more long term losers amongst the rest of us!?

What does success look like for QE2? What’s the exit strategy? Who believes that this is the correct course of action and what is their justification for such a belief?

The US Federal Reserve is set to launch a second round of quantitative easing, known as QE2, on 3 November 2010. It is probably the US policy community’s last shot at averting a double-dip recession and it may work. But there is an argument raging among economists over the dangers. Here is a brief outline of what they are doing and why, and the arguments for and against. If you can improve on it, fire away and suggest changes; ditto if you disagree. I’ve talked to a number of financial sector economists to try to get this right, but it’s still a think-piece rather than definitive.Oh, and the whole future of the world economy depends on who’s right.

via BBC – Newsnight: Paul Mason: The ‘Wall Of Money’: A guide to QE2.