I remember back in the early years of this past decade when many Republicans, and notably George Bush, were using credit agencies for securing their argument that Enron was a sound company. Heck, even Paul Krugman the NY Times liberal columnist and Enron board member himself threw it out there one time. During the run up to the sub prime housing collapse both sides used Moodys and S&P to say there was no problem to be found about the obvious wild lending going on at Fannie Mae. Franklin Raines, Jamey Gorelick, and James Johnson, all people who made millions at taxpayer expense while on the payroll at Fannie Mae could be quoted as saying the national credit agencies say everything is just hunky dory.
This past week the Obama administration took their run at saying the world was going to end if we did not do whatever had to be done to solve the debt ceiling impasse. After all as spokesman Jay Carney has said over and over the national credit agencies say our debt rating will be destroyed if we do not do whatever Obama wants to do.
Where were the debt agencies in the runup to the Greek monetary problems? How about the ongoing monetary problems in Portugal, Spain, and Ireland. Take Ireland for instance less than five years ago they were praising the "Irish Miracle" and how everyone should follow their path to prosperity. Just this week there was a scare threw up about Italy and their credit problems and possible downgrade. Italy proved just this week that they could do whatever was needed to handle their situation with several bold moves. Wrong, wrong, and wrong!
Excuse me to all of you, but look at the track record of these agencies. Enron, Fannie Mae, and totally missing the 2008 housing meltdown and we give these people any creditability? How about some stories now on how the credit agencies have taken many regular Joes for a screwing due to some foul-up in credit ratings personally. Someone tell me how in the world these agencies have any credit at all with anyone. Sometimes I wonder if the credit agencies just bend to the prevailing political winds in order to secure more business for themselves.
I have been a municipal bond buyer for over 30 years and I can not remember the last time I took a rating from the national credit ratings as a guide for purchases. Oh, I would take a look at their synopsis to see if I was missing some important info, but using their BBB or AAA as to if I would purchase the bond was worthless. One reason for this is I remember back in the early 1980's purchasing a muni bond rated AA in a large city in NC and about one year later found the bond not paying interest. The problem was the issuer was found to have cash flow problems. Upon my own investigation I discovered that anyone could have seen the cash flow problem just by doing a minimum of research themselves. How did S&P or Moody's miss it? Darned if I know, but it very well might have been because the credit agencies wanted to do business with the issuer. Who knows? I now depend on my own research and knowledge of bond issuers to make purchases. Take for instance a bond I purchased back over 3 years ago at a huge discount at the time. The bond I bought at the time was a school bond for 67 cents on the dollar and with at the time no current credit rating. The bond issuer was Carteret County NC and as anyone knows if Carteret County can not find real estate to tax to pay for schools then no one can. What use was a rating there? All I know is today I got a steal on a bond buy and some nice long term interest.
All this is to say if anyone uses credit ratings from the national credit agencies for enhancing THEIR credibility for an argument they either believe the other person is just plain stupid or mighty forgetful.
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