After the collapse of Lehman Brothers in late 2008, you would think we should have learned a lesson—that leverage is dangerous, that the banking system is fundamentally flawed, and that ratings agencies are useless. The latest news of the imminent demise and fire sale of broker-dealer MF Global shows that those lessons were truly lost.
ZeroHedge posted the current ratings from our favorite rating agencies:
“And the winners are…. Moody’s Ba2-; S&P: BBB-; Fitch: BB+;”
And just to throw insult to injury, today Bloomberg released a video about an interesting study that confirms our worst suspicions—that ratings agencies are a pay to play operation—meaning the more a company pays, the higher the rating.