2 ms·
This is unoriginal. And as someone else stated on FT, the last layer of the pyramid scheme is probably aimed at dumb money. Unintelligent mutual funds (mis) gui
by alecco 16y ago
This is unoriginal. And as someone else stated on FT, the last layer of the pyramid scheme is probably aimed at dumb money. Unintelligent mutual funds (mis) guided by S&P and Moody's ratings for inflated assets. Just like it happened in 2006-2007. I believe more "AAAA++++ would buy again" ratings from random people on auction sites than credit rating agencies. It's a scam with many players. The agencies get their cut, too. And there's no downside for them (mostly).
Edit: it happened with government bonds, too; in fact it seems they move on to the next scam every year.
- omh 16y agoS&P / Moodys are rating companies for debt, not equity. The investment proposition for someone lending a company money as a secured creditor is very different to someone investing equity, and I'm not sure that it directly results in investors getting any profits.
- alecco 16y agoYes. I'm wrong. But the ratings of the debt of corporations are highly correlated with their valuations. Edit: To be clear, I was talking about dumb money. Usually indexed funds and such. Enron was part of S&P 500 for years.