Pssst… did you hear? Standard & Poor (S&P) downgraded the US credit rating from the highest AAA to one notch down at AA+. Let’s remember what these guys are famous for. The ratings agencies missed Enron a decade ago – they didn’t reduce Enron from investment grade to junk until days before they shut down. Then they missed the Worldcom accounting scandal and the Global Crossing meltdown, marking them investment grade months before bankruptcy. Then they missed Bear Stearns, only cutting their rating one business day before they never opened again. Oh, and all those mortgage-backed securities rated AAA when they were stinking piles of poo.
Now, this doesn’t mean that the S&P is necessarily wrong. I just smell a ton of politics, and I hate politics. Also, how often have they sounded an alarm that actually helped small investors? As in “Watch out, you thought this was safe but it really isn’t! Look what we figured out with our in-depth analysis!” As opposed to “Yup, we read a newspaper last week.”
By Jonathan Ping | Investing | 8/8/11, 4:56am