Comments on: Calpers: Rating Agencies to Blame for Huge Losses

By: DeDude

DeDude — Thu, 16 Jul 2009 13:15:46 +0000

Mark E;

The medical literature publish about 2000 research articles every day. It is so complicated to understand the full impact of all of those pieces of information that even the specialists who look at just their little corner of the information often cannot follow it all (therefore we get mistakes and malpractice lawsuits). It is unrealistic to expect that a person who did not go through medical school could follow all of these medical specialties sufficiently to make choices that many specialists have a hard time getting right.

By: PMcKim

PMcKim — Thu, 16 Jul 2009 06:52:34 +0000

Another more cynical explanation? CALPERS is made of Cal State Unions that want to continue to be paid and need access to debt. California wants a better debt rating and these rating agencies want California and other states to lay off. Watch to see if the rating agencies raise their ratings on California and CALPERS majically drops their suits. this is all about leverage of a different kind.

By: Mark E Hoffer

Mark E Hoffer — Thu, 16 Jul 2009 05:15:33 +0000

DeD,

you go w/: “I cannot be expected to make good choices about what medicines to take for specific symptoms, so I go to a doctor and expect him to give me good advice.”

could you explain Why you ‘cannot be expected to make good choices..’?

By: matt

matt — Wed, 15 Jul 2009 23:10:41 +0000

@lefty: Agreed. I would be very surprised if a lot of fantasy ratings were due to direct input from Federal or pseudo-Federal entities. How is it that Ambac and MBIA weren’t at least put on credit watch in 2007? It’s likely that some Federal official noted that a downgrade or perceived downgrade would be some kind of systemic risk, as the chain of guaranteed securities would have gone with them. Think of it as sort of a “You don’t want to downgrade those AAA subprimes. Life could become very unpleasant for you.”

The complicity in the giant scam is wide and deep. Nothing will come of this.

By: DeDude

DeDude — Wed, 15 Jul 2009 22:54:10 +0000

In a modern society you have to depend on the advice of professionals and/or government regulations to ensure that you make good decsisions. I cannot be expected to make good choices about what medicines to take for specific symptoms, so I go to a doctor and expect him to give me good advice. If he gives me the wrong medicine because of some kind of payolala with a medical company I would sue him. Would that be wrong? Should I take responsibility myself? how is that different from companies relying on advice of professionals?

By: leftback

leftback — Wed, 15 Jul 2009 21:48:26 +0000

Big steaks for the lawyers on both sides. Otherwise a complete waste of time.

By: ab initio

ab initio — Wed, 15 Jul 2009 21:35:10 +0000

constantnormal – even if CALPERS was constrained to AAA securities – there were many securities in that AAA category. They made the BUY decision on these specific securities. And as a securities buyer they have a responsibility to do the proper due diligence.

I am not absolving the ratings agencies from their ratings and their pay2play business model. BUT the ratings agencies did not force CALPERS to purchase these securities. They have to take responsibility for their own greed and the herd mentality of OPM fund managers.

Its like J6P investor suing Morgan Stanley because the put a buy rating on an equity and then it went down. Its this mentality of suing others and all the tort lawsuits without accepting responsibility for ones own actions that has substantially increased friction in the US economic system.

By: Calpers will be beating up on the rating agencies « Later On

Calpers will be beating up on the rating agencies « Later On — Wed, 15 Jul 2009 21:20:02 +0000

[...] in Business, Daily life, Government at 2:19 pm by LeisureGuy What a delightful thing: Way back when, I mentioned there was a surprise coming S&P’s way. Since it is now out there [...]

By: uno

uno — Wed, 15 Jul 2009 21:11:39 +0000

@CN: Touché. But the point remains that ‘fundamentals’ cannot be used for valuation or trading. In effect, and perhaps somewhat regrettably, they are arbitrary & groundless when it comes to equity valuation on an on-going basis. We all know the truism: “the market can remain irrational longer than you can remain solvent.”

That being the case, some other metric needs to be applied in order to profit from the marketplace. From where I stand, that means fractals and fluid dynamics…though I repeat myself.

By: constantnormal

constantnormal — Wed, 15 Jul 2009 20:39:20 +0000

“buy”, not “but”