The Last ‘Mystery’ of the Financial Crisis


“As you know, I had difficulties explaining ‘HOW’ we got to those numbers since there is no science behind it,” confesses a high-ranking S&P analyst. “If we are just going to make it up in order to rate deals, then quants [quantitative analysts] are of precious little value,” complains another senior S&P man. “Let’s hope we are all wealthy and retired by the time this house of card[s] falters,” ruminates one more.

Rolling Stone Mobile – Politics – Politics: The Last Mystery of the Financial Crisis.

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.

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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Ontonix:: when Will the USA Collapse?


The European Union is in a state of evident and (possibly) irreversible demise. The first and most prominent reflection of this is the weakness of the Euro which we have recently forecasted to "dissolve" around Q3 of 2013. Once the common currency is gone, the union will probably transform into something else that is easier to manage, less complex, less heterogeneous. The structural resilience of the EU as a system has been very low (1 on a scale from 1 to 5) since November 2010 and this is certainly not a good omen.

Recently we have turned our attention to the US. Employing data from the World Bank we have rated the country as a system, incorporating into the analysis over 800 parameters spanning:

  • Economy
  • Industry
  • Agriculture
  • Energy
  • Society
  • Ecosystem
  • Transportation
  • Telecommunications
  • Military/Defence
  • Education
  • Health System
  • etc. Read more of this post

Euro 2011: the “game” was done in 1st Quarter but deep in the 4th the lights are going out!


Risk rating on internet

The following graphic represents our [Ontonix] rating of the entire European Union (comprising 27 countries, each described via 24 macro-economic parameters) and which we analyse every quarter (results from Q1 2011 analysis). For a more in depth analysis of feedback loops within networks the full article can be found here:

Reality is Made of Loops But All We See Is Straight Lines

A 1 star rating, in a 5 star stratification, tells anyone, pretty well, all they would need to know about the subject being rated!

Unlike the Rating Agencies our rating does not come in the form of an, over-priced, “opinion” that, on the bases of numerous failures in the recent past, are worth very little: if you received such inaccurate opinions from a Doctor or Surgeon they would have been the subject of numerous Medical Malpractice lawsuits and be struck off long before now. Their incompetence would tend to affect only one person at a time NOT tens of millions over generations!!! Read more of this post