Rumpole

The Critical Slipping Cog in the Global Financial Machine

When you said: "...What happens is the ratings agencies have just unilaterally relaxed monetary policy by reducing the effective system-wide rrr. Monetary policy has been relaxed quite unbeknownst to the central bank, which thinks monetary policy is unchanged as its interest rates and monetary base targets remain unchanged."

"Unbenownst" is not the word I'd use to describe central banks in this situation. I find it very difficult to believe central bankers were unaware of the effect that private rating agencies were having.

And with the more recent actions of the central banks especially the Fed, are you so sure central banks would do a better job on ratings than the private agencies? Ballooning its balance sheet with so much toxic assets doesn't inspire confidence!