Showing posts from February, 2016

Is Your Professor a Better Grader than Moody’s or Standard & Poor's?

If you have been following the thread of my last posts you will have arrived at the question:  Why did savvy investors from around the world buy billions of dollars of worthless bonds from Wall Street companies in 2008?  The answer is that they absolutely believed the ratings.  If the ratings agencies said that a bond was AAA , they accepted that it was a guaranteed, virtually no-risk investment.  Investors in Germany, Japan, Canada, the USA and all over the globe  willingly or willfully ignored the fact that the ratings agencies—Moody’s and Standard & Poors—were being controlled and manipulated by the very companies they were supposed to be evaluating. If this situation sounds inappropriate to you, stop and consider for a moment:  who evaluates you when you take a university course?  Yes, you are evaluated by exactly the same person who has a vested interest in demonstrating that his/her course has produced knowledgable, skilled graduates.  On the other hand, every c