Comments on: Pay no attention to Moody’s Berkshire downgrade http://blogs.reuters.com/felix-salmon/2009/04/09/pay-no-attention-to-moodys-berkshire-downgrade/ A slice of lime in the soda Sun, 26 Oct 2014 19:05:02 +0000 hourly 1 http://wordpress.org/?v=4.2.5 By: Ian Kemmish http://blogs.reuters.com/felix-salmon/2009/04/09/pay-no-attention-to-moodys-berkshire-downgrade/comment-page-1/#comment-261 Thu, 09 Apr 2009 12:57:49 +0000 http://blogs.reuters.com/felix-salmon/2009/04/09/pay-no-attention-to-moodys-berkshire-downgrade/#comment-261 “One of the biggest weaknesses in financial markets is the way in which investors happily downplay the biggest of conflicts” — considering that you’re being paid money to churn out opinions that we can all get for free at any bar or bus stop, you are surely under at least some obligation to adduce evidence to support such claims as this?

]]>
By: Ilya http://blogs.reuters.com/felix-salmon/2009/04/09/pay-no-attention-to-moodys-berkshire-downgrade/comment-page-1/#comment-255 Thu, 09 Apr 2009 09:56:22 +0000 http://blogs.reuters.com/felix-salmon/2009/04/09/pay-no-attention-to-moodys-berkshire-downgrade/#comment-255 Duncan, all you would have is an even more opaque securities market: the job of the rating agencies is to ptovide independent, third-party opinions on credit. Sometimes they do it well, sometimes as in the sub-prime mortgage and derivative debt example not so well but with them gone you would lose the one remaining way of overcoming informational assymetries. The challenge is not to eliminate rating agencies but to reduce their error rate.

Felix is only half-right. We should not downplay conflicts, true, but we also should not presume that someone who has a conflict in theory necessarily has one in practice. In this example, for instance, is there any evidence whatsoever that Moody’s analysts were influenced by Berkshire? Do we have the minutes of their committees to back up that claim?

]]>
By: Vikram http://blogs.reuters.com/felix-salmon/2009/04/09/pay-no-attention-to-moodys-berkshire-downgrade/comment-page-1/#comment-251 Thu, 09 Apr 2009 08:46:56 +0000 http://blogs.reuters.com/felix-salmon/2009/04/09/pay-no-attention-to-moodys-berkshire-downgrade/#comment-251 I seriously doubt the quality of these agencies as to what were they doing giving good credit ratings to companies having big exposures to sub-prime markets … it all seems so wrong.

]]>
By: Duncan http://blogs.reuters.com/felix-salmon/2009/04/09/pay-no-attention-to-moodys-berkshire-downgrade/comment-page-1/#comment-250 Thu, 09 Apr 2009 08:03:39 +0000 http://blogs.reuters.com/felix-salmon/2009/04/09/pay-no-attention-to-moodys-berkshire-downgrade/#comment-250 Just imagine a securities world free of credit rating agencies. What a better world it would be.

]]>
By: otto http://blogs.reuters.com/felix-salmon/2009/04/09/pay-no-attention-to-moodys-berkshire-downgrade/comment-page-1/#comment-248 Thu, 09 Apr 2009 07:08:07 +0000 http://blogs.reuters.com/felix-salmon/2009/04/09/pay-no-attention-to-moodys-berkshire-downgrade/#comment-248 The Moody’s tactic of being last into the playground also pays dividends.

For example, S&P and Fitch must now feel pretty stupid about handing out Peru an investment grade rating, while Moody’s sit pretty below the line and say “aaaah, boys, you shudda waited a while”.

]]>