Comments on: Monoline Death Watch: Moody’s to Grade Munis on Same Scale as Corporates http://www.nakedcapitalism.com/2008/03/monoline-death-watch-moodys-to-grade.html Mon, 23 Nov 2009 01:41:08 -0500 http://wordpress.org/?v=2.8.4 hourly 1 By: Max http://www.nakedcapitalism.com/2008/03/monoline-death-watch-moodys-to-grade.html#comment-5106 Max Thu, 13 Mar 2008 16:49:00 +0000 http://www.nakedcapitalism.com/2008/03/monoline-death-watch-moodys-to-grade-munis-on-same-scale-as-corporates/#comment-5106 It's funny that haven't Ambac and MBIA gotten into the CDO mess, nobody would even notice their muni "insurance" scam. It’s funny that haven’t Ambac and MBIA gotten into the CDO mess, nobody would even notice their muni “insurance” scam.

]]> By: Yves Smith http://www.nakedcapitalism.com/2008/03/monoline-death-watch-moodys-to-grade.html#comment-5075 Yves Smith Thu, 13 Mar 2008 05:51:00 +0000 http://www.nakedcapitalism.com/2008/03/monoline-death-watch-moodys-to-grade-munis-on-same-scale-as-corporates/#comment-5075 cb,<br/><br/>You've discovered the dirty secret. Most of the practice of finance is preying on fear, ignorance, or CYA.<br/><br/>For instance, pension funds and endowments hire money managers, even though there is ample evidence money managers add not value (a paper by Vishny, Lakonishok and Schleiffer over 20 years ago wondered how the industry could survive). And then these entities hire fund consultants (who of course charge fees) to help these saps pick the right fund manager.<br/><br/>Buffett has repeatedly written about how the Helpers, as he calls them, reduce the returns of those who have capital. cb,

You’ve discovered the dirty secret. Most of the practice of finance is preying on fear, ignorance, or CYA.

For instance, pension funds and endowments hire money managers, even though there is ample evidence money managers add not value (a paper by Vishny, Lakonishok and Schleiffer over 20 years ago wondered how the industry could survive). And then these entities hire fund consultants (who of course charge fees) to help these saps pick the right fund manager.

Buffett has repeatedly written about how the Helpers, as he calls them, reduce the returns of those who have capital.

]]> By: cb http://www.nakedcapitalism.com/2008/03/monoline-death-watch-moodys-to-grade.html#comment-5074 cb Thu, 13 Mar 2008 05:43:00 +0000 http://www.nakedcapitalism.com/2008/03/monoline-death-watch-moodys-to-grade-munis-on-same-scale-as-corporates/#comment-5074 Let me see if I understand this.<br/>If the monolines were downgraded, this would force all the muni (and other) bonds they rated to the same rating they were moved to, resulting in losses for everyone holding those bonds, the End of The World As We Know It, etc.<br/><br/>But if only munis weren't being rated on a "special" scale that artificially lowered their ratings compared to corporates, they could have had higher ratings anyway. So *poof*! instead of artificially rating the monolines high, the agencies just had to stop rating the munis artificially low.<br/><br/>Does anyone else think it's ridiculous that huge chunks of the financial system rest on such artificiality? Let me see if I understand this.
If the monolines were downgraded, this would force all the muni (and other) bonds they rated to the same rating they were moved to, resulting in losses for everyone holding those bonds, the End of The World As We Know It, etc.

But if only munis weren’t being rated on a “special” scale that artificially lowered their ratings compared to corporates, they could have had higher ratings anyway. So *poof*! instead of artificially rating the monolines high, the agencies just had to stop rating the munis artificially low.

Does anyone else think it’s ridiculous that huge chunks of the financial system rest on such artificiality?

]]> By: Yves Smith http://www.nakedcapitalism.com/2008/03/monoline-death-watch-moodys-to-grade.html#comment-5069 Yves Smith Thu, 13 Mar 2008 03:54:00 +0000 http://www.nakedcapitalism.com/2008/03/monoline-death-watch-moodys-to-grade-munis-on-same-scale-as-corporates/#comment-5069 Hadn't connected those dots, although Spitzer hadn't yet resigned when Frank gave his threat.<br/><br/>Now that a lot of cities and states have been damaged despite the efforts to save the bond insurers, I think it's open season on them. Hadn’t connected those dots, although Spitzer hadn’t yet resigned when Frank gave his threat.

Now that a lot of cities and states have been damaged despite the efforts to save the bond insurers, I think it’s open season on them.

]]> By: Anonymous http://www.nakedcapitalism.com/2008/03/monoline-death-watch-moodys-to-grade.html#comment-5068 Anonymous Thu, 13 Mar 2008 03:40:00 +0000 http://www.nakedcapitalism.com/2008/03/monoline-death-watch-moodys-to-grade-munis-on-same-scale-as-corporates/#comment-5068 Hmmmm... are different government figures all on the same page when it comes to the bond insurers? First, the rating agencies got their arms twisted to avoid downgrading the bond insurers, but now they got pressured to do something which hurts the bond insurers. Did the sudden resignation of Spitzer give Barney Frank a free hand? Hmmmm… are different government figures all on the same page when it comes to the bond insurers? First, the rating agencies got their arms twisted to avoid downgrading the bond insurers, but now they got pressured to do something which hurts the bond insurers. Did the sudden resignation of Spitzer give Barney Frank a free hand?

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