The Rating Horrors and Capitalist "Efficiency"

[gopbuster]

Good article on how the ratings co's played a role in this

The Rating Horrors and Capitalist "Efficiency"
Posted March 25th, 2008 by

Rick Wolff

Many aspects of our "efficient" capitalism combined to produce the credit meltdown that now threatens ever more aspects of the global economy. One was the private rating companies' failure to accurately assess and honestly reveal the risks of securities based on a "bundle" of loans (securities that provide their owners with a portion of that bundle's principal and/or interest). This was especially true for securities based on mortgage loans issued in the go-go years of the housing boom. Investors around the world bought those securities based on those companies' ratings. Their purchases financed the US housing bubble now gone bust. We know now that those ratings were badly mistaken. Owners of those securities around the globe are taking staggering losses and reducing their lending to all borrowers. Anxiety about the risks of all sorts of borrowing has risen alongside deepening distrust of all risk assessments. Defaults, bankruptcies, and foreclosures rise together with the odds of recession in 2008.

more.... http://www.rethinkingmarxism.org/cms/node/1119

[billyoc]

1. I fully expect to see prosecutions of ratings companies next year.

I never thought I would see "Big 5" accounting firms like Arthur Anderson prosecuted, so these ratings companies aren't as untouchable as they seem.