We couldn’t resist taking this shot at the late-Friday news that Fitch downgraded Spanish debt to AA+ from AAA, which left us dazed and confused. Why did this ratings agency decide to release this on the Memorial Day weekend when the markets were thin and subject to a very volatile reaction? This decision is not of consequence as S&P downgraded Spanish debt in April. Could this ratings release not have waited until Tuesday when the markets were back at full strength and had deeper liquidity? Would Fitch’s reputation have suffered if they had waited another few days to make this inconsequential change?
This action raises more questions about the rating agencies at a time when they are undergoing intense scrutiny. We at NOTES are always trying to find the illogic of markets and this is one of those instances. It leaves one to wonder if some of the “objective” actors in the markets are as objective as the markets want to believe? For the supreme idiocy of this Friday’s action, we are downgrading FITCH, a company so removed from the reality of market action that it does not deserve the respect they have previously been accorded. It is time to reign in the power of the raters!
May 30, 2010 at 9:09 pm |
ahhh, that was long overdue, thanks for the downgrading to UNTRUSTWORTHY!
May 30, 2010 at 11:44 pm |
They’re basically irrelevant…will always err on the side of conservatism/status quo…price action of debt & CDS’s rate the country every day.
May 31, 2010 at 11:54 am |
NEW YORK, May 28(IFR) 1:22pmCDT
Fitch says it won”t cut Spain again in the next 12 month despite expected deterioration in public finances and that eurozone policymakers should limit contagion from Greece. This may be wishful thinking as anything can happen. (Yeah, and the check’s in the mail, the Mercedes is paid for and I won’t …. This is one of the stupidest things I’ve ever seen! kgw) Robert.fullem@thomsonreuters.com
I wish I could make up this stuff! I’d be on Letterman and Leno and every comedy stage coast to coast. Can these guys really say this without laughing? To boot, the Friday timing before the three day weekend was just the icing on the cake! These morons have a place in the White House! “Despite seeing evidence of Madrid going down in flame in the coming 12 months, we won’t cut Spain again in the next 12 months.” Was a Fitch forefather captain of the Titanic? Enjoy the weekend.
Kevin
May 31, 2010 at 1:30 pm |
Yra, I agree with your comments. I add that the integrity and validity of S&P, Fitch & Moody’s was severly damaged in 2008 via their process of ratings from ’00 through mid-2008 when questions were FINALLY raised not only for the ratings themselves but also for the fiduciary relationship to those they are responsible for evaluating.
I question who actually has much faith in their ratings as no significant reforms have been implemented. Friday’s ratings announcement is another suspect example.
Perhaps there is some unspoken rule that the the FDIC uses to announce bank closures on Friday evenings- that is equally followed by the rating agencies, the US Treasury, the FED or the administration/congress- USE FRIDAY’S and any eve before a holiday for deleterious announcements unless there is a need to generate significant fear in the public for compliance, then any week day will suffice.
May 31, 2010 at 1:49 pm |
cedar –good point as are all the posts today—we at notes believe that the ratings/credit crisis has a direct line to Orange County and the need for pensions and others to buy AAA only–but they had to get rid of the shit at the same time and for us there in lies the complicity of the ratings agencies—interesting that the sage of Omaha is being dragged in front of congress on his role in Moody’s
May 31, 2010 at 7:18 pm |
Kevin–that is a very good post.Thanks!it leaves us crying as the market takes this crap seriously–please.It is so painful to think about what passes as analysis in this contemporary world.