Just talking about the economy is not going to do us much good; we need to learn how we got into this mess or better yet, who got us into this mess, why and what we need to do to make sure this NEVER happens again.
This is not deciding what we can do to bring our economy out of the free fall it is in right now but to correct or eliminate all the factors that contributed to the unraveling of our economy.
I will admit that I never paid attention to every detail of how our financial system operated; things were going very well so I didn’t feel a need to look into the inner workings of our system. Yes, I trusted our government to keep watch for me and I assumed there were enough regulations and regulators to prevent anything really bad from happening – boy, was I wrong!
In retrospect, many system failures were predictable because there was no logic behind them in the first place. Take the ratings agencies Moodys and Standard & Poor. These are the agencies that assign ratings (risk) to bonds and other financial instruments as well as financial firms and the risk rating of the finances of corporate (companies) or public (cities) entities.
You would assume that what we call “toxic securities” would have had “bad” ratings to begin with because the rating agencies are supposed to examine securities thoroughly before assigning a risk rating. Many security buyers / investors relied on a good rating before they take a chance on buying a specific security or investing in a specific company or company bond.
Well most of the failed securities and failed companies were given excellent ratings (AAA) by the rating agencies.
Do you know how these rating agencies get paid? Well, they are paid by the “issuers” of the bonds or securities. If you don’t give me a good rating so I can sell a zillion of these toxic bonds, I will never pay you to rate any of the securities that I issue or I will go to the other agency. Get my drift?
I don’t understand why people that relied on bond “ratings” to make their purchase decisions are not suing the living shit out of these companies. I don’t understand why our legal system is not prosecuting these rich idiots for some crime or another; they had to have broken some laws? These companies are still operating as if nothing has happened – why?
Excuse my rant but since these agencies are sanctioned by the SEC (Securities and Exchange Commission), they should be unsanctioned and put out of business. In their place, public (government) rating agencies need to be created. These agencies would be funded from contributions of all institutions that use ratings in their financial dealings. The people working at these institutions should be professionals (civil servants) prohibited from working at the institutions they rate for at least 15 years.
Does this make sense? Why was the rating game allowed to degenerate to this totally illogical point? This is the same as accounting agencies that sleeping with the corporations they audit – illogical and dangerous.
I will be emailing Obama’s team with my suggestions and if enough of us do, maybe his team will pay attention and do something about this. It is a Congressional job so we need to talk to our House and Senate people also.
Other ideas to come…
This is not deciding what we can do to bring our economy out of the free fall it is in right now but to correct or eliminate all the factors that contributed to the unraveling of our economy.
I will admit that I never paid attention to every detail of how our financial system operated; things were going very well so I didn’t feel a need to look into the inner workings of our system. Yes, I trusted our government to keep watch for me and I assumed there were enough regulations and regulators to prevent anything really bad from happening – boy, was I wrong!
In retrospect, many system failures were predictable because there was no logic behind them in the first place. Take the ratings agencies Moodys and Standard & Poor. These are the agencies that assign ratings (risk) to bonds and other financial instruments as well as financial firms and the risk rating of the finances of corporate (companies) or public (cities) entities.
You would assume that what we call “toxic securities” would have had “bad” ratings to begin with because the rating agencies are supposed to examine securities thoroughly before assigning a risk rating. Many security buyers / investors relied on a good rating before they take a chance on buying a specific security or investing in a specific company or company bond.
Well most of the failed securities and failed companies were given excellent ratings (AAA) by the rating agencies.
Do you know how these rating agencies get paid? Well, they are paid by the “issuers” of the bonds or securities. If you don’t give me a good rating so I can sell a zillion of these toxic bonds, I will never pay you to rate any of the securities that I issue or I will go to the other agency. Get my drift?
I don’t understand why people that relied on bond “ratings” to make their purchase decisions are not suing the living shit out of these companies. I don’t understand why our legal system is not prosecuting these rich idiots for some crime or another; they had to have broken some laws? These companies are still operating as if nothing has happened – why?
Excuse my rant but since these agencies are sanctioned by the SEC (Securities and Exchange Commission), they should be unsanctioned and put out of business. In their place, public (government) rating agencies need to be created. These agencies would be funded from contributions of all institutions that use ratings in their financial dealings. The people working at these institutions should be professionals (civil servants) prohibited from working at the institutions they rate for at least 15 years.
Does this make sense? Why was the rating game allowed to degenerate to this totally illogical point? This is the same as accounting agencies that sleeping with the corporations they audit – illogical and dangerous.
I will be emailing Obama’s team with my suggestions and if enough of us do, maybe his team will pay attention and do something about this. It is a Congressional job so we need to talk to our House and Senate people also.
Other ideas to come…
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