We keep watching an interest rate tweaked here, a program enacted there, and know that what is being done will not "save the markets"- housing or otherwise. Minyanville this morning though, offered this rather sane observation:
The problem is liquidity, solvency, and something more: faith.
No one wants to buy the bonds, SIV’s etc etc because nobody believes in them. Just as a credit bureau tells the likelihood of repayment of a loan for a consumer and allows a lender to measure risk, the ratings agencies were supposed to do the same thing. But nobody believes them.
It’s the ultimate price for dishonesty: Faith in the system.
Liquidity pumping, all of the other tricks won’t work. Because John Q public USA and worldwide doesn’t want a thing to do with them. Thus, until the fancy named papers are properly rated what they really are, no one will want them. If it’s CCC, call it that. Then we can properly judge the risk.
Our very financial system is in danger of collapsing because integrity has been stripped from the system. It will take years, and likely Congressional hearings with "weeping and gnashing of teeth" and more regulation/oversight before the system works again.
That is the price of conflict of interest and the incredible dishonesty that pervaded the mortgage system.
There is an overused but underutilized old saying, "Honesty is the best policy." It might be wildly controversial and a radically different approach, but it should be considered by government agencies and Wall Street. Desperate times call for desperate measures- and this is one idea that just might work.
Wow what a mess and we all have front row seats….lucky us
Entropy-
Kind of like watching the Titanic from the Carpathia, isn’t it?
There was a time when people who did this type of thing where tarred and feathered and then run out of town on a rail. Today, sadly, it is these folks who are running our country. Sounds like an old western, but our Lone Ranger just got caught in the brothel.
Well it very likely is CCC, they just want to sell it to John Q’s pension plan for the AAA price
The amount of greed, fraud and outright criminal activity was off the charts. The end result is not going to be good. I do feel bad for the innocent people that are/will be hurt by this.
Igors word “stupid”, which is simplistic terms sums it up.
It’s the fundamental way credit rating agencies are set up. They are paid by the very entities they rate – hence the giant conflict of interest.
I think Kennedy once recommended a tax payer funded rating system – as objective as it can possibly get in this “free” market, but Barry Goldwater shot it down.
This is feeling like science fiction. You know, you can’t believe what you’re seeing right in front to your eyes. Out of the storm clouds comes this metallic monster and we’re all standing in the streets staring as it lets loose it’s wrath. War of the Worlds.