The S&P Downgrade “Shocker” and Goldman Response: Where is the Honor Among Thieves?
There is a saying in Telugu, “dongalu dongalu oollu panchukunntlu” (Just like thieves divided the villages among themselves to rob). True to this age old maxim, Wall Street banks and the ratings agencies robbed us of our retirement nest eggs, drove most of us jobless, and kicked us out of our homes in a collaborative manner. No matter what they do now, they are not going to be trusted or respected by those with an iota of sense.
If ratings agencies were to be trusted, today would be a watershed event. S&P just downgraded US debt outlook to “Negative” from “Stable” citing a “material risk that US policy makers might not reach an agreement on how to address medium- and long-term budgetary challenges by 2013” and concern that even once agreement is reached, it might still “take a number of years before the government reaches a fiscal position that stabilizes its debt burden.”
Duh!A big Duh!
This time, their collaborative thieves at Goldman Sachs disagree with S&P. From Zero Hedge:
Not surprisingly, after eagerly pushing rating agency opinions to clients buying CDOs from Goldman, the firm’s economists are now eagerly trying to talk it down: “Clearly, the US fiscal situation is unsustainable unless a large, multi-year fiscal tightening is implemented. However, there is no information in today’s report about the fiscal situation that was not already known. Academic research has generally found that rating agency actions lag market pricing, rather than lead it. Any relevance of today’s announcement is a) as a potential catalyst for renewed market focus on these issues, particularly if the other agencies follow suit, b) a signal of a nonzero probability of an outright ratings downgrade over the next few years.” And who was the research conducted by? Moody’s? A Princeton Ph.D. academic? Yes, we know the country is screwed. But we can sure do without this condescending BS.
They say there is honor among thieves. But these thieves, are something!