Whistleblower Pulls Away Moody’s Mask of Objective Analysis

By: Saturday August 20, 2011 10:00 am

A former senior VP at Moody’s wrote an 80 page letter to federal regulators, blowing the whistle on systemic pressures placed by Moody’s business people on the ostensibly objective analysts. To those who are shocked by this, it helps to remember Econ 101: when you get paid by the people whose bonds you are rating, there’s a lot of incentive to keep the customer satisfied.

But it doesn’t stop there. Michael Hudson of UMKC notes that the perverse incentives of ratings agencies lead them to push against raising taxes to pay for things now. Instead, it’s better financially for the ratings agencies if governments keep taxes down but sell bonds . . . ’cause that’s more business for them.

Amazing what basic economics can teach you about the ratings agencies.

 

Rating Agencies, Catfood Commission II and the Next Stage of Shock Doctrine

By: Wednesday July 27, 2011 4:04 pm

Just because our most popular social safety net programs escaped this current round of shock doctrine doesn’t mean the basic formula won’t be recycled in the near future to justify cutting these programs.

FDL Book Salon Welcomes Bethany McLean and Joe Nocera, All The Devils Are Here: The Hidden History of the Financial Crisis

By: Saturday January 8, 2011 1:59 pm

There are a plethora of books written, and yet to be written, about what lead up to the 2008 financial crisis, but even so, All the Devils are Here stands out. Co-authors, Bethany McLean (co-author of the bestselling, documentary-inspiring book on the Enron scandal, The Smartest Guys in the Room) and Joe Nocera (Award winning New York Times business columnist), expertly weave a narrative that captures not just the elements, but the characters of the crisis; the human flaws, choices and repercussions perpetrated by a small, dispersed collection of very dangerous people.

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