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Old 16.12.2011, 10:03
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A rating for those rating agencies? "Fitch cuts rating for CS among six other banks"

Someone should have a rating for those rating agencies. More bad news to the market and the world!

http://www.swissinfo.ch/eng/business...l?cid=31776670

http://www.bbc.co.uk/news/business-16210134

Every day a rating agency cuts this or that and all they do (in my opinion) is bring uncertainty and despair to the market. make more companies and countries lose credibility and share and us lose our Jobs

What do you think, should there be a rating for those agencies?
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Old 16.12.2011, 10:51
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Re: A rating for those rating agencies? "Fitch cuts rating for CS among six other ban

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Someone should have a rating for those rating agencies. More bad news to the market and the world!

http://www.swissinfo.ch/eng/business...l?cid=31776670

http://www.bbc.co.uk/news/business-16210134

Every day a rating agency cuts this or that and all they do (in my opinion) is bring uncertainty and despair to the market. make more companies and countries lose credibility and share and us lose our Jobs

What do you think, should there be a rating for those agencies?
Sure, go ahead and start one up. Good luck with that.

The agencies are doing exactly their jobs (although one can argue about their quality). If investors run like scared little girls every time a credit agency states the obvious, well, that's hardly the agency's fault.
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Old 16.12.2011, 10:55
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Re: A rating for those rating agencies? "Fitch cuts rating for CS among six other ban

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The agencies are doing exactly their jobs .
Fully agree. In 2008 the agencies were slammed for acting slow. They are now being slammed for acting fast. If a company/country overspends then it is their fault, not the agencies fault.
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Old 16.12.2011, 11:16
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Re: A rating for those rating agencies? "Fitch cuts rating for CS among six other ban

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(although one can argue about their quality).
Well you just said it all. If the quality is questionable, then should one not think that the result ie rating is also flawed and hence the outcome and effect?
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Old 16.12.2011, 11:21
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Re: A rating for those rating agencies? "Fitch cuts rating for CS among six other ban

I'm surprised Barclays is there. Iirc they didn't even take a government bailout!
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Old 16.12.2011, 11:37
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Re: A rating for those rating agencies? "Fitch cuts rating for CS among six other ban

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I'm surprised Barclays is there. Iirc they didn't even take a government bailout!
Do not forget that the rating agencies also reacts to Public Presentations.

As a Credit Suisse Partner, this was expected.

If you see Brady Dougan (CEO of CS) the bank wants to reduce by half the investment area, along with other measures not public so far.

Of public knowlege is the investment in Asia and Brasil.

So in 2013 and 2014 we will see the rating uprising again.

If you see CS last public presentation you see that the bank is ok but can be much better in these though times.
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Old 16.12.2011, 12:53
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Re: A rating for those rating agencies? "Fitch cuts rating for CS among six other ban

The main problem with these agencies is that they create positive (destablizing, procyclical) feedback loops when in fact their purpose would be to create negative (stabilizing, anti-cyclical) feedback loops.

A good article:

Ferri, G., Liu, L.-G. and Stiglitz, J. E. (1999), The Procyclical Role of Rating Agencies: Evidence from the East Asian Crisis. Economic Notes, 28: 335–355. doi: 10.1111/1468-0300.00016

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We demonstrate that credit rating agencies aggravated the East Asian crisis. In fact, having failed to predict the emergence of the crisis, rating agencies became excessively conservative. They downgraded East Asian crisis countries more than the worsening in these countries' economic fundamentals would justify. This unduly exacerbated, for these countries, the cost of borrowing abroad and caused the supply of international capital to them to evaporate. In turn, lower than deserved ratings contributed – at least for some time – to amplify the East Asian crisis. Although this goes beyond the scope of our paper, we also propose an endogenous rationale for rating agencies to become excessively conservative after having made blatant errors in predicting the East Asian crisis. Specifically, rating agencies would have an incentive to become more conservative, so as to recover from the damage these errors caused to them and to rebuild their own reputation.
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Old 16.12.2011, 15:05
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Re: A rating for those rating agencies? "Fitch cuts rating for CS among six other ban

Well it is the Governments that created the problem.
Govts. make rules like, for example, pension funds can only invest in assets that are AAA rated. Now when there are fewer AAA rated assets around the Govts are starting to feel cold draughts...

Nobody asked the Govts. to make these rules which have given the rating agencies so strong an influence.

Situation is different for sovereign bonds. In this case the big buyers & sellers are major banks have their own internal credit rating groups who asses the risk & the banks buy/sell & price in the markets on their own ratings so not exactly following what the rating agencies say.

So for example the interest on Spanish bonds in recent auctions is lower than Italian because the buyers made their own risk assessment.
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Old 16.12.2011, 15:17
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Re: A rating for those rating agencies? "Fitch cuts rating for CS among six other ban

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What do you think, should there be a rating for those agencies?
If there is too much shit in the World, would it be better to go blind?
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Old 16.12.2011, 15:24
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Re: A rating for those rating agencies? "Fitch cuts rating for CS among six other ban

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Well it is the Governments that created the problem.
Govts. make rules like, for example, pension funds can only invest in assets that are AAA rated. Now when there are fewer AAA rated assets around the Govts are starting to feel cold draughts...

Nobody asked the Govts. to make these rules which have given the rating agencies so strong an influence.
I agree with your assessment that the rating agencies are obscure und untrustworthy and their ratings should thus be disregarded by the pension funds.

Last edited by SamWeiseVielleicht; 16.12.2011 at 17:05.
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Old 17.12.2011, 12:25
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Re: A rating for those rating agencies? "Fitch cuts rating for CS among six other ban

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The main problem with these agencies is that they create positive (destablizing, procyclical) feedback loops when in fact their purpose would be to create negative (stabilizing, anti-cyclical) feedback loops.
I suppose that if war breaks with Iran, you could also argue that reports published by the IAEA drove countries to war.

Would it be better to mute them?

Last edited by flavio; 17.12.2011 at 13:18.
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Old 17.12.2011, 12:50
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Re: A rating for those rating agencies? "Fitch cuts rating for CS among six other ban

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I'm surprised Barclays is there. Iirc they didn't even take a government bailout!
So did Raiffeisen, and they now rated down. Fully healthy banks!
How analytics can rate a company below their gross worth? (ABB, once rated below the value they only have in real estate already) How dare is a system, value a company on a 3 month base? Where is there growing for future possible if every 3 month has to be billions in profit made? How much I like that the employees are ping-pong balls to equalize short terms loss?
Not enough profit the last 3 months, fire 2000 people! WTF...

My humble suggestion: The banks should only be able to loan what they have, no more virtual, not exiting money to loan.

Can I loan you 2 billion I don't have? No way! so, why a bank could do it.

Why for, heaven sake, we as nations, give up to authority for money and now sudden need to borrow money from someone that doesn't have this money ether! Its actually mind blowing!

All this wealth around us, is it virtual? Money is overvalued and work undervalued. And as harder the work is, as less value we give it!

It can't be right and it needs to be equalized again. if the 1% don't wake up, one day they will - as they did already once, starring at the guillotine.

just my 2 cents...
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Old 17.12.2011, 13:03
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Re: A rating for those rating agencies? "Fitch cuts rating for CS among six other ban

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I suppose that if war breaks with Iran, you could also argue that reports published by the IAEA also drove countries to war.

Would it be better to mute them?
True, it is like the people who blame the weather man for bad weather - he is just giving a forecast as he sees it.

Reminds me of the story some years ago about a bout of bad weather that was blamed on the El Nino effect. There was some poor guy in the LA phone book named El Nino & he was getting threatening phone calls - he had to go ex directory in the end.
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Old 17.12.2011, 13:18
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Re: A rating for those rating agencies? "Fitch cuts rating for CS among six other ban

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How analytics can rate a company below their gross worth? (ABB, once rated below the value they only have in real estate already) How dare is a system, value a company on a 3 month base? Where is there growing for future possible if every 3 month has to be billions in profit made? How much I like that the employees are ping-pong balls to equalize short terms loss?
.
Why does the value of their real estate make any difference? It's an illiquid investment whose valuation is opinion & not fact. The real estate is not ring fenced it's just another asset against liabilities.
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Old 17.12.2011, 13:21
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Re: A rating for those rating agencies? "Fitch cuts rating for CS among six other ban

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So in 2013 and 2014 we will see the rating uprising again.

.
Probably not, the ratings will fall further as lossess on real estate materialise & the loss of profitibility of CH companies due to the strong CHF.
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Old 17.12.2011, 13:32
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Re: A rating for those rating agencies? "Fitch cuts rating for CS among six other ban

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Why does the value of their real estate make any difference? It's an illiquid investment whose valuation is opinion & not fact. The real estate is not ring fenced it's just another asset against liabilities.
Trying to explain DFCF and the effects of hidden liabilities?

Good luck! Some people just don't GET TO see things clearly.

In my case, when I read oversimplified über-moral opinions like 'markets know shit, and we, the majority of people know the real ways of the wretched corporate World', I think, oh shit, I really can't care less, its so hopelessly far away from any substantiated informed logical path.
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Old 17.12.2011, 14:00
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Re: A rating for those rating agencies? "Fitch cuts rating for CS among six other ban

If they owned the property & had zero debt then you would have a point. A company will go bust if it's unable to pay the salaries at the end of the month, cash flow is often more important than illiguid assets.


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Trying to explain DFCF and the effects of hidden liabilities?

Good luck! Some people just don't GET TO see things clearly.

In my case, when I read oversimplified über-moral opinions like 'markets know shit, and we, the majority of people know the real ways of the wretched corporate World', I think, oh shit, I really can't care less, its so hopelessly far away from any substantiated informed logical path.
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Old 17.12.2011, 14:01
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Re: A rating for those rating agencies? "Fitch cuts rating for CS among six other ban

If they owned the property & had zero debt then you would have a point. A company will go bust if it's unable to pay the salaries at the end of the month, cash flow is often more important than illiguid assets.

It's crystal clear to me, not sure why you don't see this as well, perhaps you have an interest as an employee or shareholder.


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Trying to explain DFCF and the effects of hidden liabilities?

Good luck! Some people just don't GET TO see things clearly.

In my case, when I read oversimplified über-moral opinions like 'markets know shit, and we, the majority of people know the real ways of the wretched corporate World', I think, oh shit, I really can't care less, its so hopelessly far away from any substantiated informed logical path.
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Old 17.12.2011, 14:12
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Re: A rating for those rating agencies? "Fitch cuts rating for CS among six other ban

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If they owned the property & had zero debt then you would have a point. A company will go bust if it's unable to pay the salaries at the end of the month, cash flow is often more important than illiguid assets.

It's crystal clear to me, not sure why you don't see this as well, perhaps you have an interest as an employee or shareholder.
I actually agree 100%. Misunderstanding
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Old 19.12.2011, 20:19
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Re: A rating for those rating agencies? "Fitch cuts rating for CS among six other ban

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True, it is like the people who blame the weather man for bad weather - he is just giving a forecast as he sees it.

Reminds me of the story some years ago about a bout of bad weather that was blamed on the El Nino effect. There was some poor guy in the LA phone book named El Nino & he was getting threatening phone calls - he had to go ex directory in the end.
I don't see why we should keep subpar weather forecasters though, especially if those forecasters can influence the weather.
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