Srdjan Popovic

Never Listen to the Rating Agencies

I believe that in the current crisis the role of the rating agencies went beyond those of neutral observers... as was the case many times before. For example, if you remember the Peso crisis in the early 90s you will recall that the rating agencies also gave great ratings to bonds depending on financial instruments that behind ten layers of smoke had only Mexican bonds. Take some junk bonds, repackage them a few times and hide that they even exist, and get A ratings. Only this time it was sub-prime. Are rating agencies incompetent or corrupt? Without proof it remains an open question.