Since 2007, Standard and Poor's have done everything in their power to wreck the world economy. David Donovan comments.
If you ever needed any further confirmation that the world economic system is built on foundations of stupidity, it came this week with the downgrading of the US economy from a 'AAA' to a 'AA+' rating by the Standard and Poor’s Rating Agency, which will now and forever more be known as the “Poor Standard” Ratings Agency.
Most people had probably thought that the US economy was through the worst of its problems after Congress passed, at almost the very last minute, a bill to raise the nation's debt ceiling. But no, after that crisis had been resolved, last Thursday this upstart ratings agency had the gall to tell the world’s richest country they didn’t like its future debt profile. At that point, the Treasury Department of the world’s richest country – also the one that provides the world’s reserve currency – took a look at the Poor Standard calculations and pointed at a $2 trillion dollar mistake in their future debt projections. Unperturbed, Poor Standard downgrades the US economy anyway.
This downgrade led to financial panic and about US$ 3 trillion being wiped off the US stockmarket in a week and probably more than that around the rest of the world. Noticeably, the other major rating's agencies, Moody's and Fitch, have declined to follow-suit.
Did Poor Standard factor in the likely effect of their own stupidity when they made their rating on the US economy? It seems they did, because the US economy is looking more AA+ every day now. Absolute genius.
How did an individual company – a two-bob ratings agency of all things – develop the power to destroy the free market? Why do they have the ability tell the world economy to go into GFC Mk 2 — as is looking more and more likely every day? In fact, why is this company even still in business? Moving on from the $2 trillion “rounding error” they made in the US downgrade, Poor Standard is the ratings agency that in 2007 quite happily awarded those toxic collateralised debt obligation securities (remember them, they were the ones based on the dodgy no paperwork US mortgages that caused US GFC Mk 1) a AAA rating. Triple - bloody - A!
So, it appears that the good oil from Poor Standard is that the US economy is less healthy than those 2007 CDOs — a product that was based on the fervent hope that regular repayments would be made by people without a job, any income or any real assets. Now, there’s some classic Poor Standard thinking.
Now, here’s the really ironic bit. Because of Poor Standard classing CDOs as “AAA rated” securities, people and organisations were investing huge amounts of money in those worthless products, inevitably leading to the collapse of the US banking system, which meant the US Government was forced to bail out all the major US banks, loan companies and insurance companies that were deemed “too large to fail”. Suddenly, US taxpayers – most of whom had never even heard of CDOs and didn’t care what they were rated – found themselves in over a trillion dollars more debt. And then of course, last week, Poor Standard moseys back into town, tells the US that – surprise, surprise – it now has too much public debt and downgrades the wealthiest nation on the planet to a rating on a par with New Zealand and Belgium.
Cue bugout-crazy world financial panic.
So, there you have the story of the world’s biggest idiots — the people from the Poor Standard Ratings Agency. Not content with almost wrecking the world economy in 2007-08, they’re back for another go.
Well done Poor Standard, you’ve played a blinder.
You would hope someone from Poor Standard would lose their job over this godawful disaster, but the chances are that after the rest of us are all finally reduced to mucking around in the dust for the odd stray corn kernel, they will still be in their air-conditioned offices on Wall Street plotting ways to destroy the market for dusty second-hand corn.
If you have money in superannuation or shares and are pretty aggrieved by the way the market’s gone this week, here’s the contact details of the very Poor Standard Ratings Agency:
Standard and Poor’s Australia
Unit 37, 120 Collins St, MELBOURNE, VIC, 3000
Phone: (03) 9631 2000
Fax: (03) 9650 8106
Email: clientservices_pacific@standardandpoors.com
Send them a message. I know what I’ll be saying to them:
YOU KNUCKLEHEADS!
