QuoteOriginally posted by: hamsterQuoteOriginally posted by: whamI disovered recently that these agencies have paid by issuers since the 70s! They are in the business of rating the creditworthiness of companies but they are paid by those same companies?? Utterly insane!A man (= rating agency) is carrying a timber (= ratings for all models using them) a long the street (= the market) where many other pedestrians walking around (= other market participants). >>> suddenly someone is yelling and the man turns to have a look around...Of course, it's very efficient having few men carrying all the big and long timber. However, they harm all other pedestrians if they become distracted. And, who's yelling, and why? I don't think it's very effective relying on information monopolies. The question is more, whether investors want good information or cheap information?I agree! The problem is that financial markets are populated by "trend followers". Few companies develop proprietary models and now they're paying (and making others pay) a huge price for their mistakes and for relying on 3rd parties! The message should be: "Always do your homework!".
Last edited by BullBear
on December 25th, 2008, 11:00 pm, edited 1 time in total.