Rating agencies have rightly shouldered much of the blame for the financial crisis, and yet the world still looks to them for guidance on sovereign debt. For example, the Euro, which has now dipped under $1.30, owes part of its lost value to recent credit rating agency (CRA) downgrades of Greece, Portugal and Spain. These countries are clearly mismanaging their national budgets, but given the recent history of CRA blunders it feels a bit ironic to trust them in particular to tell us when a country’s in trouble.
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Supposed to be Standard, More Often Just Poor
Filed Under: Gold Fundamentals, Stock Market Commentary, U.S. Dollar Tagged With: Banks, CRA, credit rating agencies, DR EXTRA!, Featured, financial markets, Legislation, Markets, Recession, regulation, Rocky Vega
Solving Debt and Moral Hazard With More Debt and Bailouts
The Fed’s response has been adolescent in the sense that it has permitted major damage by allowing the credit boom to happen. Right under its nose, the broad money supply (M3) doubled in the last eight years, from $7 trillion to $14 trillion, but it is trying to fool the market into thinking this statistic is irrelevant because it was vigilant and never allowed inflation to surface.
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