Wow, just WOW. Some of the securities that they are potentially down grading could be going down 5 grades. As it states in TFA, this will trigger further selling, as many holders of this debt can't hold securities that are not rated as investment grade.

Of course this begs the question that has been asked a brazillion times in the last year: How did this crap get rated so high to begin with? It seems that in 2006, I could say a bag of shiat was worth 100 million, and Moody's would have graded it Aaa.

/how long before all the ratings agencies are sued out of existence?

BigBooper: How did this crap get rated so high to begin with?

Part of it is that unlike normal ratings agencies, these make you pay to get rated. So the normal relationship between credit rating agencies and consumers of the information is turned around - the companies being rated are the customers, and the agencies have an interest in serving them. As an example, the CDOs were given the highest rating until well after they crashed.

Even one of the Managing Directors testified before the house that "the firm was criminally deceiving investors by purportedly inflating ratings on securities even into the current year, long after the subprime scam had been exposed and the market crash had occurred."

BigBooper: I could say a bag of shiat was worth 100 million

I'll tell ya what. I'll give you $90-million for that bag of sh*t.

But that's my final offer.

Rev.K: BigBooper: I could say a bag of shiat was worth 100 million

I'll tell ya what. I'll give you $90-million for that bag of sh*t.

But that's my final offer.

I'll offer a 14 million down payment, with interest only increments over the next 40 years, as the negatively amortized schedule comes to bear. However, I'll split the bag of sh*t into 10,000 parts and sell derived options on said sh*t. You profit, I profit. Investors get screwed.

EatHam

Basically this. The financial crisis exposed just how meaningless these ratings are. Plenty of junk quality stuff rated AAA that went to 0 and was never downgraded.

Trust the ratings like you would a used car salesman.

I thought the mood would be blue.

FTFA: Some 775 hybrid and subordinated notes issued by 170 "bank families" in 36 countries are on review after Moody's altered the assumptions it uses to rate the debt

they were assuming the bag of shiat was worth 100 million

/now they assume its worth 40 million

Rev.K: BigBooper: I could say a bag of shiat was worth 100 million

I'll tell ya what. I'll give you $90-million for that bag of sh*t.

But that's my final offer.

I will give you 10 mill in cash and then leverage the bag for the other 90 while I turn it around with an IPO and sell it as a new streamelined bag o Sh*t for 150 mil.

Yea "private equity"

EatHam: BigBooper: How did this crap get rated so high to begin with?

Part of it is that unlike normal ratings agencies, these make you pay to get rated. So the normal relationship between credit rating agencies and consumers of the information is turned around - the companies being rated are the customers, and the agencies have an interest in serving them. As an example, the CDOs were given the highest rating until well after they crashed.

Even one of the Managing Directors testified before the house that "the firm was criminally deceiving investors by purportedly inflating ratings on securities even into the current year, long after the subprime scam had been exposed and the market crash had occurred."

Cheers for that summary. I should have guessed.

Just like recent big auditing f*ups here in Oz and overseas. Auditing companies just wanted repeat business [and of course, business for their other "advisory services"] and would sign off on anything.

Also some big property developers [$100M+] going under in Oz coz EVERYBODY was pissing in EVERYONE'S pocket. Developers. Financial advisers with their kickbacks. And those lying c@nt property valuers.

Everybody is whinging about the red tape of Sarbanes-Oxley etc. But it has to be done, surely? Too many crooks out there.

Although how long before this gets watered down or compliance gets lax and the corrupt wheel reinvents itself? 15 years?

mitEj: Rev.K: BigBooper: I could say a bag of shiat was worth 100 million

I'll tell ya what. I'll give you $90-million for that bag of sh*t.

But that's my final offer.

I will give you 10 mill in cash and then leverage the bag for the other 90 while I turn it around with an IPO and sell it as a new streamelined bag o Sh*t for 150 mil.

Yea "private equity"

HOT TIP FROM THE KAY-MAN:

Watch out for the recent Myer IPO in Australia. It was stinky from the moment the prospectus came out.

** Myer is a 100+ year old "trusted" department store.
** IPO aimed at "mums and dads" cashing in on this trusted name.
** In the last 20 years it has lost its market share [was previously seen as slightly up-market] and lost its "way" generally, due to extremely bad management [eg. constant sales]. I can't see them reversing it in a hurry.
** History of board room shenanigans, snouts in troughs, and criminal activity resulting in jail for some execs.

The whole time I'm thinkin' "This stinks! You'd be mad to invest." Alarms ringing.

** Today's news that the Tax Office is sniffing around due to some Cayman Islands transactions. I think the IPO cash might have even been frozen[?]

But boy, the execs have done a slick sales job. Even got me thinkin' at times "Hmmm. Maybe I was too harsh?" Of course, the business press have been pretty helpful. I can't recall even one mention of "caveat emptor."

/TANGENT!

D135: FTFA: Some 775 hybrid and subordinated notes issued by 170 "bank families" in 36 countries are on review after Moody's altered the assumptions it uses to rate the debt

they were assuming the bag of shiat was worth 100 million

/now they assume its worth 40 million

I thought the US Gov already bought it for $100M?

If I read that correctly, the reason all these crappy securities were rated so high to begin with is Moody's was confident the government would bail out anyone who owned them!

Soooo....the rating agency is actually "rating" the debt according to current market value?

Wow.

Nice market commentary I got from a London bond broker today:
"mind you, this is the same agency who tried to make several Tier 1 bonds Aaa only a couple of years ago (including the Icelandics), so might be worth just ignoring them and figuring out for yourself how risky bonds really are..."

at this point 450 bn is a drop in the bucket