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Strategies & Market Trends : Mish's Global Economic Trend Analysis -- Ignore unavailable to you. Want to Upgrade?

To: Steve Lokness who wrote (34551)	7/29/2005 11:01:37 PM
From: regli	Read Replies (1) \| Respond to of 116555

Moody's gets subpoenas from Spitzer today.reuters.com Fri Jul 29, 2005 4:31 PM ET By Jonathan Stempel NEW YORK (Reuters) - New York Attorney General Eliot Spitzer subpoenaed Moody's Corp. <MCO.N>, which runs one of the largest credit rating agencies, for documents on how it rates reinsurers and mortgage securities, broadening his probe of Wall Street practices. New York-based Moody's on Friday also said second-quarter profit jumped 40 percent on strong demand for ratings, especially in residential mortgage-backed and home equity securities. It said full-year profit and revenue may rise roughly twice as fast as it had previously forecast. Moody's appears to be the only one of the five nationally recognized credit rating agencies to have received subpoenas from Spitzer. The news helped send Moody's shares down $2.12 to $47.31 on the New York Stock Exchange. The 4.3 percent drop was the company's biggest one-day decline since October 2003. In its quarterly report filed with securities regulators, Moody's said it received a subpoena on July 13 related to its financial strength and subordinated debt ratings for reinsurers since Jan. 1, 1997. The inquiry also concerns ratings that were "unsolicited" or didn't involve companies' participation. Moody's said it stopped assigning unsolicited ratings in 2000. Debt ratings help determine how much issuers pay to borrow money in the capital markets. Financial strength ratings measure the ability to pay claims. Spitzer has subpoenaed several companies over reinsurance accounting, and sued insurance giant American International Group Inc. <AIG.N> for fraud. His probe led to the ouster of AIG's former chief executive, Maurice "Hank" Greenberg. "CURIOSITY" Moody's also received a subpoena on May 11, covering the June 2000 to June 2003 period, about securities offerings backed by jumbo mortgages from prime borrowers, and "credit enhancement evaluations." That subpoena also seeks documents on Moody's credit policies since Jan. 1, 1999. Moody's said it is cooperating and is responding to the subpoenas. Spokeswoman Fran Laserson said, "We think the timing of the disclosure is appropriate." Raymond McDaniel, who became chief executive in April, on a conference call declined to say whether the subpoenas relate to Moody's or other companies. "I certainly do appreciate the curiosity around this," he said. Representatives for McGraw-Hill Cos.' <MHP.N> Standard & Poor's, Fimalac SA's <LBCP.PA> Fitch Ratings, A.M. Best Co. and Canada's Dominion Bond Rating Service said their agencies had not received subpoenas from Spitzer. Marc Violette, a spokesman for Spitzer, declined to comment. PROFIT SURGES Moody's quarterly net income increased to $145.4 million, or 47 cents per share, from $103.5 million, or 34 cents, a year earlier. Results reflected a stock split in May. Excluding a charge of 2 cents per share related to Japanese sales tax issues, profit was 49 cents per share, 6 cents above the average view of analysts polled by Reuters Estimates. Revenue rose 25 percent to $446.8 million, including increases of 22 percent in the United States and 30 percent elsewhere. Analysts, on average, forecast $397.7 million. Moody's expects 2005 profit per share before items to increase 13 percent to 17 percent from a year earlier, and revenue to rise 13 percent to 16 percent. In April, it had forecast 7 percent to 10 percent increases. Analysts, on average, had projected growth of 10 percent in profit per share and 11 percent in revenue. Ratings revenue rose 28 percent, to $363.3 million, and in structured finance increased 43 percent. Revenue from research rose 25 percent and from Moody's KMV risk unit fell 2 percent.

To: Steve Lokness who wrote (34551)	7/30/2005 12:00:44 AM
From: Jim McMannis	Respond to of 116555

You could have lost money in the 1990 to 1992 era too. But there has never been the clear and present danger of Real Estate right now.

To: Steve Lokness who wrote (34551)	7/30/2005 10:32:43 AM
From: Tommaso	Read Replies (1) \| Respond to of 116555

>>>To read your post, an investor could never ever lose money in real estate during the past 50 years.<< If that had been what I meant, I would have said it. Oh for heaven's sake: If I said that life expectancy had increased in the last 50 years, would you tell me, "Oh no: people go on getting sick and dying."? On average, and over extended periods, real estate has appreciated over the past fifty years. Except in certain markets, such as the Boston area maybe 20 years ago, there have not been declines comparable to several bear markets in the equities markets that have occurred over that period. In the Great depression, the value of real estate declined severely and did not fully recover for about 20 years. Nothing like that has happened in the last 50 years.