But this is to miss the big point. S&P and its rival Moody\’s have a power……What gives S&P and Moody\’s such immense power is not their brilliant analysis: it is simply the function they perform. Whether prime minister or CEO, if you want to borrow from bond markets you need a credit report to show investors…….It sounds boring and technical, which is why no one gets wound up about the credit rating duopoly…….Why should S&P and Moody\’s earn such vast sums?……. In my working life, the credit-rating duopoly……But not the agencies: since every borrower still needs a rating,……Rather than stick to obscure technicalities, the duopoly……
You do not have to have a rating to issue a bond.
It\’s hugely useful to have one of course. You\’ll be paying through the nose for the privilege of not having one. But there is no legal requirement to have one at all.
But the real proof of ignorance here is that he seems not to have heard of Fitch. You know, the third major ratings agency? The one that makes up the triumvirate. So that what we actually take is not the Moody\’s S&P or Fitch rating, but the two out of three one?
Plus of course there are thirty or forty more around the world, several of them having the same legal status inside the US as the big three (nationally recognised something or others).
To insist that it\’s a duopoly is simply to be ignorant of the world one is describing.
And as to this:
The obvious solution would be to take this public service into public hands. Let\’s have a ratings agency run by the UN, funded by pooled contributions from both lenders and borrowers. It should be the only one to have preferential access to data from corporates and countries. Let\’s make the ratings business a utility, rather than a semi-cartel that intimidates elected politicians and rakes in excess profits. It\’s time to break up the bullying double-act.
Is the man insane?
Sirisly? We\’re going to put Sarkozy, through the Security Council, in charge of France\’s bond rating?
Obama the US one, Osborne the UK?
Fuck me but that\’s nonsense.
Especially as those 30 to 40 other agencies would suddenly see their revenues soar as people turned to them for their views. And if they were banned, to the new companies that would replace them.
Man\’s a loon.
It would appear that, with the honourable exception of Larry Elliott most of the time, the chief qualification to write on matters economic for The Guardian is to be ignorant of matters economic.