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Originally posted by cpdaman
lcmgroupe.home.comcast.net...
read this guy.....here's his last
By Ian Mathias
Baltimore, Maryland
When it comes to the post-crisis world of American finance, there's one thing we can all agree on:
Something's got to give when it comes to ratings agencies.
Over the past decade, we've all witnessed the "big three's" role in the credit crisis. S&P, Moody's and Fitch gave their famous AAA ratings to an array of troubled securities, companies and nations. Not only did they issue the wrong ratings - and correct those ratings far too late - but their dubious business model was put under the spotlight, too... ripe with conflict of interest and suspicious relationships with their Wall Street clients.
Thus, rating agency reform would appear to be a legislative home run...a slow moving softball pitched right into the sweetspot of financial reform.
Well, Congress just effectively whiffed.
Earlier this week, the House and Senate removed the one amendment in the coming financial reform bill that addressed the ratings agencies. In its place - really, you can't make this stuff up - Congress will commission a two-year SEC study. The SEC, apparently not busy enough, will spend the next couple years poking and prodding the agencies and ultimately deliver Congress a report, which will announce whether a conflict of interest really does exist, and the Commission's advice as to how to fix it.
Now, we will admit, the "reform" that this study will replace was a complicated mess. The brainchild of Senator Franken, it was a plan all too typical of Washington: The amendment would have empowered the SEC to set up a new agency with its own fun acronym (the Credit Rating Agency Board, or CRAB) which would in turn give the ratings agencies new sets of hoops to jump through and papers to file. In short, we don't' blame Congress for wanting a different solution.
But a commissioned study by the SEC? C'mon.
What Congress ought to do is act, not create a sub-panel, or a study, or punt this to the next class of congressmen (which is essentially what this study is doing). What's needed is a tough decision - one that will have immediate consequences and send a message to the ratings world: Either get it right, or as Donald Trump would say, "you're fired."
We certainly don't have a monopoly on all the right ideas, but why not start by stripping S&P, Moody's and Fitch of their status as Nationally Recognized Statistical Ratings Organizations? The SEC bestows such a distinction. Basically, the biggest, best, most trusted raters in the world are given the NRSRO seal of approval, which is supposed to assure clients and investors that they're trustworthy. It's one of the central reasons why the "big three" have such a chokehold on the ratings universe. Only seven other firms - in the entire world - hold the distinction.
So, how do you get this SEC blessing? Read their explanation... and try not to snicker:
"The single most important factor in the Commission staff's assessment of NRSRO status is whether the rating agency is 'nationally recognized' in the United States as an issuer of credible and reliable ratings by the predominant users of securities ratings."
Are S&P, Moody's and Fitch not "nationally recognized" fools, at best? Is there a living soul left that would consider their ratings "credible and reliable?" Here are some more SEC standards for the NRSRO privilege:
"The [SEC] staff also reviews the operational capability and reliability of each rating organization. Included within this assessment are... the rating organization's independence from the companies it rates... the rating organization's rating procedures (to determine whether it has systematic procedures designed to produce credible and accurate ratings)..."
Ha!
So, we ask the SEC and Congress: Why not remove the "big three" from this club? In fact, since the credit crisis has proved this NRSRO status to be largely useless, why not abolish the designation all together? It's a rare situation in business legislation that a level playing field isn't a good thing...and this doesn't seem to be one of 'em.
And if it was, in fact, the SEC's own NRSRO system that empowered the big three to make such awful mistakes, what faith should we have that this new study - to be conducted by the SEC - will be of any use?
In the meantime, we can't help but wonder if shares of ratings agencies and their parent companies are a contrarian buy. Both the American free market and legislature has shown the will to reform and revolutionize this sector, but now more than ever, it appears no one will have the stones to do it. Thus, despite being so universally disliked, at this stage it's hard to see the "big three" doing anything else but business as usual.
Ian Mathias
for The Daily Reckoning
by knukles on Tue, 07/13/2010 - 08:33
(...)
Further, the ratings agency so promulgating such is held to be of an independent nature, whilst domiciled in ...China. Verily, the landlord of American sovereign finance, the decision published not only in but publicly announced at the official organ of the Chinese government.
(...)
Originally posted by chilipep7
reply to post by Evasius
I have been involved in the stock market for some time. I am now 60 years old. I see everyday, the fall of the dollar, interst rates at all time low, record prices every day in gold prices...yet the stock market continues to go up. WHY & HOW. don't tell me big business is controlling the market. I will not buy that. Do not post a reply just to reply or give your opinion...we all want real facts. We hear daily some of the people giving responses that the market is going to crash on this day or that day...what do you base your opinion on, I read the same negative things and yet the market goes up. This makes no sense to me. Only real replys please, no bull_hit.
yet the stock market continues to go up. WHY & HOW. don't tell me big business is controlling the market. I will not buy that.
I read the same negative things and yet the market goes up. This makes no sense to me. Only real replys please, no bull
Originally posted by SpaceMonkeys
This is whats been happening, the markets are being cheer leaded to the moon.
The technicals were looking extremely bearish for a while but it doesn't matter when the markets are being cheer led to higher highs. But when it's ready to come back down, boy will it come down.
September 27, 2010
Graham Summers’ Weekly Market Forecast (H&S Edition)
Last week I forecast that we would see a reversal in stocks. The market did indeed show signs of breaking down on Wednesday and Thursday, however, the Fed’s juice managed to keep stocks afloat and closing in the green for the week.
All told, the Fed injected more than $10 billion into the market directly via its three Permanent Open Market Operations (POMO) pumps. However, Bailout Ben wasn’t content with mere open market juicing, so he pumped another $10 billion into the system “behind the scenes.”
Full Text + Charts
If you work in the mortgage industry or for a title insurer, you might not want to make any plans for the next six months. Foreclosuregate is about to explode. It is being alleged that many prominent mortgage lenders have been using materially flawed paperwork to evict homeowners. Apparently officials at quite a few of these firms have been signing thousands upon thousands of foreclosure documents without even looking at them. In addition, it is being alleged that much of the documentation for these mortgages that are being foreclosed upon is either "improper" or is actually "missing". As lawyers start to smell blood in the water, lawsuits challenging these foreclosures have already started springing up from coast to coast. In fact, some are already calling Foreclosuregate the biggest fraud in the history of the capital markets. JPMorgan Chase, Ally Bank's GMAC Mortgage and PNC Financial have all suspended foreclosures in the 23 U.S. states where foreclosures must be approved by a judge. Bank of America has actually suspended foreclosures in all 50 states. Now, law enforcement authorities from coast to coast are calling for investigations into this controversy and it could be years before this thing gets unraveled.
BURYING THE TRUTH IN A TIME OF LIES
In August, theaters in the US began showing the trailer of Inside Job, a movie that promised to explore the truths behind the economic collapse that has leveled much of the world’s economies and banks since 2008.
A $20 million effort written, produced and directed by MIT grad Charles Ferguson was scheduled for theatrical release in early October 2010 by Sony Classics; and a great number, including myself, anticipated its release—a release, however, that was to be far different than expected.
Two weeks ago, I wondered what had happened. The movie had not opened here as scheduled and the trailer was no longer being shown in theaters. I then discovered Inside Job was playing at a local independent theater with virtually no publicity.
The film is as riveting as its trailer promised, see www.sonyclassics.com... Ferguson’s pointed questioning of bankers, government officials and business school professors exposes his subjects for what they are, i.e. educated, overly-confident, smarmy, self-excusing promoters of Wall Street’s greed who had sold themselves to mammon in order to further their own ambitions.
To understand how Inside Job was silenced (yes, it was “an inside job”), a comparison can made to other movies released in 2010
Leap Year budget: $19 million opening screens: 2,511
Legion budget: $26 million opening screens: 2,476
The Tooth Hurts budget: $48 million opening screens: 3,344
Edge of Darkness budget: $60 million opening screens: 3,066
Inside Job budget: $20 million opening screens: 2
If you don’t see the movie you won’t be enraged—and that’s exactly what they’re counting on.
Originally posted by chilipep7
reply to post by Evasius
I have been involved in the stock market for some time. I am now 60 years old. I see everyday, the fall of the dollar, interst rates at all time low, record prices every day in gold prices...yet the stock market continues to go up. WHY & HOW. don't tell me big business is controlling the market. I will not buy that. Do not post a reply just to reply or give your opinion...we all want real facts. We hear daily some of the people giving responses that the market is going to crash on this day or that day...what do you base your opinion on, I read the same negative things and yet the market goes up. This makes no sense to me. Only real replys please, no bull_hit.