Jim’s Rant For The Day. The Rating Agencies Are Lying Again.
If you saw the movie The Big Short you will recall that as the Mortgage Backed Securities fell in value the three rating agencies failed to downgrade the bonds. They continued to classify them as AAA rated contributing to the fraud and eventually the collapse and bank bailout of 2008.
Well, they are at it again. They recently downgraded the Chinese corporation Evergrande to “Selective Default”. It’s a new classification never before used – a made up word. It appears they are trying to hide the legal truth that Evergrande has defaulted. Why? Because if they recognized it for what it really is, then large investors will have to report those investments on their books as worthless, exposing them to margin calls. If the rating agencies wait then the December 31th filing deadline might be skipped buying investors more time.
It’s still just all fraud as things collapse.
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