Wednesday, February 6, 2013


I should really shout out a big "Thank you!"  to the former Janet Reno minder and present Attorney General of the United States, Eric Holder, for making bloggers' lives a good deal easier.  Just at a point in time when we were all craving material, this hack sends us manna from heaven: the indictment of Standard & Poors for their role in creating the financial collapse of 2008.

Now from time to time there have been some curious positions taken by this administration with which reasonable men can agree or disagree but for sheer head-scratching numbness, this one may be the best of all.  Five years after the event, after thousands of hours of discussion and debate, now comes the justice department with all the power and majesty of the The United States of America suing an individual entity for actions taken by it which another branch of the very same government STILL requires it to perform as a means by which said governments claims to be protecting the investing public.  Huh?  Furthermore, there were a couple of other guys involved in the same activity, namely Messrs. Moody's and Fitch.  They apparently remain pure as the driven snow.  Of course they didn't lower the credit rating of the U.S. at a very inappropriate time did they, which, whether connected or not, is about the worst kind of speculation to encourage within the financial markets.  I mean, if you can't trust Eric Holder, who can you trust?  Anyway, S & P has gone out and hired probably the single most connected guy in all of D.C. to defend them of the charges and all we can do is hope for a knock-down, drag-out trial which of course will never happen.  Too bad, something good might have come out of this.

The truly sad part of this entire side-show is the fact that the real issues will once again be swept under the rug and remain ready to leap out and attack us at another time.  The problem is not whether S & P were maleficent in their duties; the problem is why the hell do they and the others like them have these duties at all?  The answer of course is that are confirmed upon them by Congress supposedly on behalf of investors to provide competent advice as to the credit worthiness of investments which, in some cases, is mandatory on certain investors before any investment can be made.  In short, and we have said this before, Congress has created a cartel which has the effect of the removal of any chance of competition thereby stifling any hope of improved performance whereas at the same time removing all responsibility from the investor of making an intelligent decision on his own..."S & P said it was OK so I did it."

This is beyond stupid but the argument which will arise will be focused on how much new government oversight...i.e regulations...will be needed to "fix" the shortfalls in the system NOT whether the system should be canned, for you see for the latter to occur Congress would have to admit that it made a mistake and that aint gonna happen.  Of course one solution might be that S & P will be forced to battle so many private  lawsuits alleging the same cause of action from the lazy incompetents that simply were prepared to let someone else to the job for which they were being paid that they are forced out of business.  Such a confirmation is devoutly to be wished.

It is remarkable, however, how lazy and sloppy we have become in our thinking and how tolerant in our responses.  It has been suggested that we need the S & Ps of the world to perform the role spelled out for them because the business of finance has become so complex that one simply can't expect all the different types of investors to be aware of all of the different financial products of today and the risk which are associated with them.  Investment managers need help in this effort.  They need someone they can rely on to tell them what to do........Why?........If the investment managers didn't have the crutch of an S & P perhaps the products in which they are asked to invest wouldn't be quite so complex and opaque.  As a matter of fact, they damn sure wouldn't.  And, as an added benefit, some fool in Iceland wouldn't dream of doing the research on a package of home mortgages containing three different levels of investments in products he doesn't understand in a place he's never heard of much less visited.  The result?  Solvency all around.  My, now there's a unique concept.  Of course there might be a few summer homes on Ocean Road in Sagaponic that go begging, but I expect we can deal with that.

Anyway Mr. Holder, charge ahead.  We know you are just taking orders.  Besides, it makes a blogger's life a bit easier.  Sort of like having you're own little Standard & Poors.  Pay's lousy, though.


It appears during my hiatus, it has been discovered that things may not be quite so good in Euroland as thought, and--are you ready for this--they may be some skullduggery in the Italian banking system.  Imagine.  We are going to get to the bottom of this, just you wait!!

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