The Treasury Secretary of the United States of America gave an interview with ABC this weekend. He was asked about Moody's comment that the USA might lose its triple A rating. He replied.
“Absolutely not,” Geithner said, when asked in an ABC News interview broadcast yesterday whether a downgrade is a concern. “That will never happen to this country.”
You notice that Secretary Geithner said "never".
When one thinks that the laws of gravity (physical or financial) do not apply to one, one is likely to be in for a surprising downfall.
And that leads into another issue. Chairman Mao's observation of the relationship between political power and guns is oft quoted. Of course, guns cost money.
Here's another perhaps cautionary tale from a land on whose Empire the sun never set. And never would or so we were told.
Posts
2 comments:
I really don't believe in those rating agencies, and that is why I think we need a solid regional one, because Moody's Standard and Poor, Fitch, they all praise themselves and badmouth others.
Thanks your comment.
Are the rating agencies always right? No, and that's been demonstrated more than once.
What I've seen in the GCC usually has been that ratings were higher than warranted. And that is the general criticism - not that they have been too low. And I've seen more than one rating that was obviously wrong - double or single B's given investment grade ratings.
Would a regional agency be better?
I doubt it. I don't think they are likely to be any smarter than the international agencies. Perhaps, more importantly, as with the local press, there will be some sacred cows that can't be frankly evaluated or criticized.
And if the intent is to sell one's debt to international investors, one will need a rating from an internationally recognized agency.
There is however one regional ratings agency with a solid reputation - Capital Intelligence. But its base is outside of the GCC so that it is not subject to any local pressures.
Post a Comment