Incompetence Can Save Us

Today I am going to do something different, openly praise blatant incompetence. I will list my reasons later but first let me sing the praises of sheer incompetence at Moody's, Fitch, and the S&P (the big 3 rating agencies).

Downgrade of U.S. Debt Long Overdue

Many are in shock that the S&P downgraded debt of the US from AAA. Not me. It was long overdue.

However, the S&P proved it was incompetent in the way it made the downgrade. Pray tell how can a rating agency make a $2 trillion error? The answer is obvious: sheer incompetence.

The irony is Moody's and Fitch proved they are incompetent by not downgrading U.S. debt.

If you need a myriad of reasons, I highly recommend Issues and Solutions for Restoring Credibility to the Credit Rating Agencies and Rehabilitating the Alternative Banking System by Janet M. Tavakoli, President, Tavakoli Structured Finance, Inc.

Also note that Egan-Jones downgraded US debt on July 18 from AAA to AA+ and nobody batted an eye.

"We are taking a negative action not based on the delay in raising the debt ceiling but rather our concern about the high level of debt to GDP in excess of 100% compared to Canada's 35%."

NRSRO Certification

The SEC certifies Egan-Jones as one of 10 NRSROs "Nationally Recognized Statistical Rating Organizations".

The "Big 3" NRSROs are Moody's, Fitch, and the S&P.

Most have never heard of Egan-Jones or any rating agencies but the big 3, and that explains why nobody howled when Egan-Jones did its downgrade, yet everyone howled like rabid wolves over the S&P's action.

The wolves demanded action and action they got.

S&P Under Justice Department Investigation

The Associated Press reports Justice Department investigating Standard and Poor's mortgage securities ratings .

The Justice Department is investigating whether the Standard & Poor's credit ratings agency improperly rated dozens of mortgage securities in the years leading up to the financial crisis, The New York Times reported Wednesday.