Reddenbacher

Rating Agencies Take Due Fire

PURE UNADULTERATED NONSENSE. Thanks to JoePlumber for pointing out Marco was fired by S&P. Ratings agencies had an unparralled record of performance and excellence (you can look it up) prior to the unprecedented implosion of subprime MBS, which anyone who foresaw defaults greater than 13-14%, which rating models assumed. was pretarnatualy prescient. Blame lies in GREED, spread from GREEDY INVESTORS AROUND THE WRLD AND OF ALL KINDS needing that extra spread, GREEDY I-BANKS needing those extra fees and then stupid enough to make CDS side bets and take back some of their own subprime issuance. GREED of the small and mid size banks and mortgage specialty banks who thought they find a way around risk and not have to work to KNOW THOSE TO WHOM THEY LENT. GREED of the useless and predatory MORTGAGE BROKERS WHO LIED to people about what to expect. GREED OF the people who ignored their guts and common sense in thinking they could get something (a House) for nothing (or at least no money down, no income verification.) And yes , GREED of the RATING AGENCIES WHO failed to blow the whistle soon enough when they first saw lending standards crash.

BTW - Only 1 of the Big 5 Auditors went away - the other four got fatter and happier off Sarbanes-Oxley and the death of Arthur Andersen.

The Real Credit Crunch

What you call deflation is what most of us refer to as a deep recession or indeed a depression. This means massive job losses and wealth losses across society. Of course it must be prevented at all costs. And after it is prevented a new regime of appropriate regulation and enforcement needs to be put in place so that the surviving financial firms serve their societal purpose of helping to finance the real economy while earning a very nice return for their effort. Contrast this to what has happened over the last dozen years where the financial firms chased after ever greater profits through the great paper shuffling gambling casino they built atop their traditional busiess of financing the real economy. We'll (us taxpayers) will have to save some of them but in return "appropriate" regulation and "vigorous" enforcement must be put in place.