Moody's lowers EU rating outlook to 'negative' | Hacker News Reader

Moody's lowers EU rating outlook to 'negative'

bbc.co.uk

Didn't Moody also give AAA ratings to those junk bonds that triggered the housing crisis? I think all the rating agencies did?

So why are we listening to them again?

We need a ratings agency for rating agencies.

My naive answer is: we need to stop tying our national and publicly-funded entities to ratings. Something's wrong when social security is forced to bind itself to external rating agencies that in turn make it a good idea to bet against social security (happening in France, right now).

Yes. S&P, Moody's & Fitch seem to have the collective IQ of a kidney bean.

Then you have trillions in pension funds shifting overnight because government regulations depend on the output of these rating agencies. You could shift regulation away from these, but maybe you might have your national debt downgraded? Ratings agencies pretty much terrify governments.

What kind of organization is Moody's? Who watches them? Who made them qualified to issue ratings? Are they accountable for their ratings? Why would anyone listen what they say?

http://en.wikipedia.org/wiki/Nationally_Recognized_Statistic...

What kind of organization is Moody's? - They are an NRSRO.

Who watches them? Who made them qualified to issue ratings?

"The U.S. Congress passed the Credit Rating Agency Reform Act of 2006, Pub.L. 109-291, 120 Stat. 1327, enacted September 29, 2006. This law required the SEC to establish clear guidelines for determining which credit rating agencies qualify as NRSROs.

Are they accountable for their ratings?

"In February 2009, the SEC promulgated amended regulations designed to address concerns about the integrity of the process by which NRSROs rate structured finance products,"

Why would anyone listen what they say?

"A Nationally Recognized Statistical Rating Organization (NRSRO) is a credit rating agency (CRA) that issues credit ratings that the U.S. Securities and Exchange Commission (SEC) permits other financial firms to use for certain regulatory purposes....SEC regulations also require that money market funds (mutual funds that mimic the safety and liquidity of a bank savings deposit, but without Federal Deposit Insurance Corporation insurance) comprise only securities with a very high rating from an NRSRO. Likewise, insurance regulators use credit ratings from NRSROs to ascertain the strength of the reserves held by insurance companies."

So if I read correctly it's a US organisation, controlled by the SEC, giving european countries, UE and other structured financed products (is that novlangue for "country" ?) a note to estimate the financial credit reserve of said products.

Are there such european credit rating agencies giving notes to California or Kentucky ? We never hear about those on this side of the ocean :(

There are plans to set up European Agency's. Mainly to add balance to the US colored ratings.

For now you could also check the Chinese Rating Agency: "The Dagong Global Credit Rating Company, which lowered the United States to A+ last November after the U.S. Federal Reserve decided to continue loosening its monetary policy, announced a further downgrade to A, indicating heightened doubts over Washington's long-term ability to repay its debts." http://edition.cnn.com/2011/BUSINESS/08/02/china.us.rating/i...

Funny, communists lowering a credit rating because it's too socialist (Keynes and loose money policy).

http://en.wikipedia.org/wiki/Moody%27s_Investors_Service#Rol...

I think they're right. The EU as it stands today will certainly add to a deeper new recession. However: They are highly selective in their ratings. They focus on the EU and seem to 'forget' the US (and Great Britain). Both are also deeply in debt and both have no plans to even reign in their spending.

Even some previously supportive economists now think that the UK's current right-wing government need to refocus on encouraging growth. They won't, though. This is class war not economics.

The UK is part of the EU, although not part of the Eurozone (thanks, Soros!).

And the US is doing better than the UK to the extent that it is focussing on growth more than on tax cuts for the rich.

"Refocus on encouraging growth" is fine. Disturbing markets with political preferences for 'this or that' is not fine and will deepen the recession.

Reply on news.ycombinator.com