Letter: Predictions are below standard
Sunday, August 14, 2011
Standard & Poor’s, the company prepared to give whatever rating they are paid to give, has made a step into partisan politics. This is the same paid entity that provided AAA ratings for the garbage mortgage securities sold by investment banks even as the industry was crumbling in public view.
Now this sick and pathetic company has entered into partisan politics and issued a farcical downgrade of U.S. Treasury bonds. First, there is no question that the U.S. will make its bond payments absent some political intervention prohibiting the Federal Reserve from buying bonds and reducing the debt in exchange for inflation. Second, with a downgrade, the yield on Treasury bonds would be rising. Instead, investment is fleeing equity into U.S. Treasury bonds and yields are falling. The market has spoken and S&P is wrong again. My only question is why the Securities and Exchange Commission hasn’t banned this sham of a business from doing ratings.
Malcolm M. McCay