To Hell With Credit Rating Agencies by David Arthur Walters

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    TO HELL WITH CREDIT RATING AGENCIESBy David Arthur Walters2010 The awful truth about the role of the credit rating agencies in bringing aboutthe financial panic and great recession is out. The credit rating agencies werenot journalists or newscasters or issuers of mere opinions, as they like tosuppose in order to evade responsibility for their malfeasance. They wereimposters, advertising agencies in disguise, and the dealers who hawked thepoisonous securities they rated were fraudsters. Figuratively spea king, fool’s gold was stamped as pure gold by expert assayers who intentionally put their heads in the sand and their asses in the air and became the prospectors’ prostitutes.More civilly speaking, the credit rating agencies deliberately gave risky asset-backed securities high, investment grade ratings so the toxic assets could belawfully invested in by regulated investment institutions, whereupon the rating agencies collected handsome fees for their government-sanctioned seals of approval. Again and again the credit rating agencies disregarded their duty to dodue diligence, abandoned common sense to cultivate ignorance, conveniently assumed facts, recklessly and fraudulently evaluated the risk associated with thesecurities, and employed worthless mathematical models to inflate values inorder to make tons of easy money for themselves, knowing all along that agreat deal of damage was eventually bound to be done to a great number of people. The rating scheme itself was insane, but the people involved were  logical enough: If someone called a spade a spade, she would be fired, but if hecalled it a diamond, he would be overworked yet make a bundle.By golly, the rating agencies were selling ratings and sinners were snapping them up as if the ratings were catholic indulgences. With plenty of money around to be had on loan, who would not like to buy a good credit rating? Aslong as the Ponzi scheme is kept up and enough people do not get wise enoughto cash out all at once, everyone may come out a winner and go to heaven, orso it seems if you have enough faith in the numbers on your fraudulentstatements. After all, Bernie Madoff was giving people what they wanted. That peculiarsmile on his face after he got busted was over the irony of it all, that the foolsdo not want to know that capitalism is inherently corrupt and that its financialsystem is fraudulent and depends on faith in money if not Mammon. No one is without sin, and even the worst sinner, who is naturally the highly respectedand envied person at the top of the heap, may be redeemed, along with thepoor folk who bought into the home ownership dream and took out mortgageloans they could never afford to pay off unless the value of their homes keptgoing up. We might not feel very sorry for the subprime victims who did notread or could not understand the convoluted terms of the adhesion contractsthey were signing, but now literally innocent people are losing their jobs andhave to default on their prime obligations because of the colossal confidencegame fomented in the highest ranks of society. Naturally the anarchist wouldclaim that no one with a social security number is innocent enough to bespared the busting consequences of the BOOM. Your average creditworthy breadwinner had never heard of investment gradesecurities backed by pools of subprime mortgages, but now she and he has hadits meaning driven home in the form of unemployment and foreclosure. Yes,now they know about the malfeasance of the credit rating agencies, and they  would have justice done unto them, for the negligent, reckless and fraudulentmisrepresentations by the credit rating agencies are at the heart of the financialcalamity that brought our advanced civilization to its economic knees to pray tobig government for salvation, as did Treasury Secretary Henry Paulson when hetook to his knees to plead with House Speaker Nancy Pelosi. Where there was some tangible collateral, like real estate, its value had beenartificially inflated, thanks in part to the willful negligence and unmitigatedgreed of the elite who control all three branches of government. Those so-called branches of the United States government are really one, just as the  father, the son, and the holy ghost are one god. The distinctions made in thelatter are logically absurd, for three cannot equal one, nor can absolute powerbe logically divided. To wit, the figmental branches of government are an artfulillusion governed by a continuously colluding power elite whose conspiracy belies the popular notion that the singular government is a democraticmultiplicity. As for the mainstream corporate press, the so-called forth branchof government, it functions, like the credit rating agencies, mainly as asycophantic advertising agency for the monolithic establishment, and it wouldbe no means have the system that pays it overturned although it does aid in thechanging of the guard from time to time.However that may be, the inevitable bursting of the bubble was bound to leavethe assets underwater. The perpetrators were inundated with a great flood of money in hopes that replacing con-money with play-money would enable them to keep their houses above water. “Tear down your houses and use the timberto build rafts!” is the ancient warning from Sumer. The consequenc es of thisbust may still be of biblical proportions, which might give radical minoritiessome leeway to liquidate blameworthy public figures and public officials.Several leading personal causes of the debacle the nation presently suffers stillhold high offices under the guise of Senator Obama’s token CHANGE, whichat most means no more than Senator McCain’s token REFORM, i.e. a tweaking of the engine so that the power elite may do business as usual, insteadof the radical change and reform needed to save the revolution. Only ten-percent of the colonial population was in favor of the American Revolution.History teaches that populations can endure a great deal of poverty for a long time, but not if expectations have been raised for long. Unemployment now exceeds ten percent, and real unemployment double that, in a country withtraditionally high expectations and more than a taste of prosperity.Most of the blame has historically fallen on the leaders because few leaders write histories, so pardon us if we would fain follow that tradition, howeverunwittingly. We are not surprised but are duly outraged by their misconduct. Law abiding Cuban Americans might rhetorically shout “Al paredon!” and we might join them and call for the nonviolent overthrow of the corrupt government residing in the nations’ houses of ill repute while preserving the pristine state. As if that were possible, for the corporatists  –  an euphemism forfascists  –  would invoke emergency powers to suspend the democratic process,and call out the National Guard if need be. Still it is a wonder that the exploitedpopulace has not taken up arms, erected guillotines, torn out corrupted hearts,mounted willfully ignorant heads on pikes, nailed spectacularly dishonestpolitical heads to rostrums, and revived the call for the extermination of   lawyers who legalized the vice and the judges who condoned it. Instead, we seethe same heads who talked people into the fraud hawking yet more poison as aremedy. Are Americans gullible, or just too darn nice for their own good? Why is it that they work against their own interests, literally march againstthemselves, and rate a frustrated fascist leader a socialist because of hissheepish talk and color of skin? As for the credit rating agencies that put the seal of good housekeeping on thegigantic defrauding of the people, are these swindlers to get away with thebooty? There ratings were not news at all but were false commercialadvertisements. Hardly has faith in their ratings anymore, yet they arecontinuing to throw their weight around the country and the world as wespeak, threatening nations, states and companies with their awful rating power. As we can see from the token attempts at reforming the raters who ratified thegreatest rip-off in history, not much is likely to be accomplished other than alittle tweaking of business as usual. Big business owns the government of theUnited States. Its regulatory agencies, in turn, are naturally in bed with thebusiness they regulate, outsource certain regulatory functions via certainlicensing arrangements, and there is the nub of the unjust enrichment. TheUnited States Congress has given the Securities and Exchange Commission thefranchise for franchising credit rating agencies, whose business is guaranteed by the fact that numerous laws require investments to be favorably rated by them prior to issuance. Thus are the ratings “embedded” in the law, and have the weight of the government behind them. Moody’s, Standard and Poor’s, and Fitch have most of the spoils of this arrangement hence are referred to as anoligopoly. The laws and regulations make it very difficult to hold the licensed ratersresponsible for anything but blatant fraud, and even then the judiciary hasmade that very difficult to prove whenever the raters are accused. Wheneversuits are brought for breach of contract, negligence, misrepresentation and thelike, the credit rating agencies plead their favorite defense, that their ratings areonly published opinions or are protected by the Second Amendment, whichprohibits the abridgement of freedom of speech or the press. The judiciary goes along with the one-sided, fallacious argument hence is complicit infostering an attitude that the credit rating agencies could literally say anything they wanted to in the form of a rating and not be held liable for mistakes andlies. So much for an independent judiciary, whose lawyers make and enforcethe very laws that legalize the iniquities of their rich and powerful clientele.
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