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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: Paul Kern who wrote (85189)	8/16/2007 2:58:47 PM
From: 10K a day	Read Replies (1) \| Respond to of 110194

I got 800 Shares of WorldCom, You want em? -g-

To: Paul Kern who wrote (85189)	8/16/2007 8:35:18 PM
From: forceOfHabit	Respond to of 110194

Paul, I agree the rating agencies basically sold their reputations by delivering AAA ratings on this crap. (Actually, even before this there were allegations of rating agencies threatening to downgrade debt of issuers who wouldn't pay them for a rating, but I digress). I disagree that a quasi-government agency would be any less prone to this kind of blatant conflict of interest. At least now, with the inevitable lawsuits alleging fraud, collusion, etc. its not the taxpayers who will be on the hook. I think rating agencies should be treated sort of like auditors. No we don't have quasi-governmental audit agencies. And yes the auditors have been complicit in any number of corporate frauds. But they aggrieved parties (including the government) can go after them with both civil lawsuits and criminal charges. I think that's the best we can hope for. <rant> Basically, its a case of buyers beware, and the Wall Street types pissing and moaning now that this stuff was rated AAA but it never should have been and its all the rating agencies' fault are just looking for excuses. They knew perfectly well how the game was played. Those pension fund trustees (money market fund, bond fund, hedge fund managers) who are going to claim that they never would have bought this stuff if it wasn't AAA are telling only half the truth. Its true they wouldn't (couldn't because of their investment guidelines) have bought the stuff, but at the same time, they were begging for it. They knew how the ratings were obtained and they didn't care how the paper got its AAA. They were desperate for the yield, so Wall Street delivered the yield and the rating, and they closed their eyes (and their minds) and bought the stuff. Now the shit has hit the fan and they're wearing it. I for one say it looks good on them, they earned it. </rant> Oh, and by the way, I hope the rating agencies are held accountable for their part in the fraud, just not as scapegoats for the other, equally guilty, players. habit