They Are Right and They Are Irrelevant
Of the three major ratings agencies, only one, Standard and Poor’s has downgraded the credit quality of the
government debt. U.S.
Nate Silver is the premier mathematical analyst of economics and politics and his blog in the New York Times, Five Thirty Eight is the premier source for quantitative information on economics and politics. Paul Krugman is a Nobel Prize winning economist whose column and blog for the New York Times is the absolute best of its class. Both have written accurately scathing articles on Standard and Poor’s and why there “credit ratings” are not very credible or reliable.
Mr. Silver concludes in a piece aptly and cleverly entitled, “Why S. & P’s Ratings Are Substandard and Porous”
relying on the consensus of the market is almost certainly better than relying on Standard & Poor’s, whose advice has more often than not led investors toward the losing side of bets.
Notoriously, S.& P. gave Lehman Brothers, whose collapse triggered a global panic, an A rating right up to the month of its demise. And how did the rating agency react after this A-rated firm went bankrupt? By issuing a report denying that it had done anything wrong.
|S&P Rated Them A - Right Until They Got the F|
Photo: Last Two Employees Leaving Lehman Brothers