Hmmm... Now let me see...
Apparently... all the paranoid neocon militarists... three-quarters of the delusional evangelicals... and half the lotto playing, lipstick wearing, cretins... are willing to believe that "the underlying fundamentals of the economy are strong... less government is good... taxes stifle growth... and market's must be FREE To Choose... To Profit... and To Fail."...
But the Hindu's... who have apparently been paying attention to Wall Street's frauds all along... seem to suggest that such ideologues, salesmen, and cretins should be kept far away from the controls:
In defence, rating agencies informed the Committee that Enron provided `deceptive' and `fraudulent' information to them. But they were told that the rating agencies had a "major obligation" and "duty" to get the truth on Enron's financial condition. Under law, rating agencies have special access and protection. They are allowed to look at a company's inside information to make assessments and are exempted from liability when they participate in securities offerings. And yet, they did not ask for the information. So, if they did not ask for more information, there was good reason for it. They were aware of the real state of affairs and were helping the company put through creative packages — collateralised debt obligations (CDOs) — to ward off the risk. Perhaps, based on Enron's connections, they were confident that the White House would come to the rescue as it did when LTCM suffered a similar crisis. Unfortunately, the situation was out of control and beyond the White House's reach. Rating work was dependent on sound accounting practices, transparency in the disclosure of assets and liabilities of a corporation. Such companies as Enron distorted the accounting practices. They shifted risk by shifting them to banks and insurance companies through the creation of CDOs. CDOs were shuffled between companies, banks, funds and insurance companies. Fictitious revenue streams were created and trading companies, in turn, created fictitious trading turnovers through round-tripping. The shuffling of CDOs was also to circumvent regulations. Amid the chaos, the rating agencies were expected to rate securities, which were backed by fictitious accounts, and hidden in CDOs whose ownership was unclear. As descried by The Economist (May 16) they had to rate the "asset managers as much as cold assessors of the underlying assets".
It is easy to demolish the rating agencies. It is not as easy to establish a new structure in their place. This is partly because there has so been much reliance for over three decades on private agencies to perform a `public' role. The inadequacies of such reliance have become clear. Regulators the world-over would need to rate securities and fix thresholds for various purposes. In the US and EU, where deregulation philosophy is dominant, there is reluctance to establish statutory agencies to undertake the role.
Ultimately, it may be unavoidable. The reluctance is based on the view that these agencies would not be able to fill the bill and it would impose additional costs on banks and institutions. The former is a prejudice; the latter a fallacy if the overall savings in social costs and interests of pension funds, etc, are considered. Old habits die hard. So where reason fails, necessity must drive.
thehindubusinessline.com
Well maybe we ought to get old Ganesh a visa after all. But will we follow The Mouse? ...Or Robespierre II?
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