So why are we listening to them again?
Then you have trillions in pension funds shifting overnight because government regulations depend on the output of these rating agencies. You could shift regulation away from these, but maybe you might have your national debt downgraded? Ratings agencies pretty much terrify governments.
What kind of organization is Moody's? - They are an NRSRO.
Who watches them? Who made them qualified to issue ratings?
"The U.S. Congress passed the Credit Rating Agency Reform Act of 2006, Pub.L. 109-291, 120 Stat. 1327, enacted September 29, 2006. This law required the SEC to establish clear guidelines for determining which credit rating agencies qualify as NRSROs.
Are they accountable for their ratings?
"In February 2009, the SEC promulgated amended regulations designed to address concerns about the integrity of the process by which NRSROs rate structured finance products,"
Why would anyone listen what they say?
"A Nationally Recognized Statistical Rating Organization (NRSRO) is a credit rating agency (CRA) that issues credit ratings that the U.S. Securities and Exchange Commission (SEC) permits other financial firms to use for certain regulatory purposes....SEC regulations also require that money market funds (mutual funds that mimic the safety and liquidity of a bank savings deposit, but without Federal Deposit Insurance Corporation insurance) comprise only securities with a very high rating from an NRSRO. Likewise, insurance regulators use credit ratings from NRSROs to ascertain the strength of the reserves held by insurance companies."
Are there such european credit rating agencies giving notes to California or Kentucky ? We never hear about those on this side of the ocean :(
The UK is part of the EU, although not part of the Eurozone (thanks, Soros!).
And the US is doing better than the UK to the extent that it is focussing on growth more than on tax cuts for the rich.
