The Value of REAL Sovereign Debt Ratings

Mike Larson | Friday, May 6, 2011 at 7:30 am

If there’s anything we’ve learned about the major ratings agencies, it’s that they’re almost ALWAYS a day late and several bucks short.
In the early 1990s, they failed to downgrade or adequately warn about ailing life and health insurance companies … until it was too late.
In the early 2000s, they didn’t cut Enron’s debt ratings until days before the company went broke.
In 2008, Moody’s actually rated Bear Stearns “A2″ on the very day the firm failed! Standard & Poor’s gave it an “A.”
Just a few months later, when Lehman Brothers crumbled, they screwed up again! On the very morning the giant investment bank collapsed, Moody’s still gave it a rating of A2; S&P gave it an A; and Fitch gave it an A+!
Finally, we all know that the agencies blessed billions and billions of dollars worth of crappy mortgage securities with tip-top AAA ratings. Those securities subsequently imploded, helping precipitate the worst credit crisis in the history of the U.S.