oh, I agree....this whole bailout is rewarding bad behavior.
Well.. it depends upon who's the primary instigator of the bad behavior, doesn't it?
For example.. If I'm in a greyhound race, I follow the rabbit. And I'd better stay abreast of the herd, or I'm going to fall behind and I won't even stay even, let alone win. And in such a race, being the "tortoise" isn't a sure bet that you'll remain in the competition.
So who's the "rabbit" I'm following that guiding me and setting the pace? Well, IMO, that would be the ratings agencies. They assigned the risk analysis to all of those ABS's, and especially the traunches of RMBS's and CDOs they assisted in structuring. THEY ARE THE ONES who said it was just fine to mix Sub-Prime and Alt-A in with AAA and still give that traunche a AAA rating. They are the ones who convinced the market that it was perfectly safe to insure them.
And now, all of a sudden, the ratings agencies have suddenly "found religion" and told us that all of these securities they previously sold as AAA were not properly "stress tested" and now they are writing them off as if they have no value at all. They are downgrading the companies who RELIED UPON THEIR PREVIOUS ERRONEOUS RATINGS and causing companies to come with billions in additional collateral in order to maintain those ratings.
Yet, none of the ratings agency stocks are being punished. They are facing no fines or admonishment for their negligence. They are facing no apparent litigation or Federal investigations (that I know of) with regard to their seeming inability to properly assess the credit worthiness of TRILLIONS OF DOLLARS in securitized debt, or the companies owning them...
Nope.. the "rabbit" has led us all to on a path to hell, and into the jaws of a hungry pack of wolves (the shorts).
And now, as I mentioned with ABK and MBI, they can't seem to get enough of adjusting their "stress tests" and exacerbating the market turmoil.
It's like yelling fire in a crowded theater.. Yet, they were the same voice that packed them into that theater in the first place.
Does that mean there are other parties to blame?? No.. Certainly the SEC bares blame for letting those 5 investment banks operate with 40:1 leverage. That was insane and created a government sanctioned monopoly. Now only Goldman stands alone amongst them as the survivor (assuming Morgan is to be acquired). And since the Government helped us into getting into this mess, they have to help us unravel it.
Hawk |
