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No, This Is Not An Onion Headline: S&P Puts Moody's On Downgrade Review
We are now at the point where one can only sit back and cackle as the insanity unravels. The president earlier agreed with his supervisor that the Economy is doing swell on a day when the market posted the 5th highest TRIN rating in history, the ECB is saying all is well even as Europe is about to implode, and now, S&P has just announced it has put Moody's on creditwatch negative, the reason: "We believe there may be added risk to U.S.-based credit rating agency Moody's business profile following recent U.S. legislation that may lower margins and increase litigation related costs for credit rating agencies." Just so you understand what is going on here - S&P: a credit rating agency, is downgrading Moody's, a credit rating agency, on concerns finreg will impair credit rating agencies. Well, if "suiciding" your chief competitor is the best way to approach this situation, whatever works... Next week, Moody's downgrades S&P, followed by another downgrade of Moody's by S&P, until both companies bankrupt each other with a mutual D rating. John Nash would be so proud.
Full press release:
Overview
- We believe there may be added risk to U.S.-based credit rating agency Moody's business profile following recent U.S. legislation that may lower margins and increase litigation related costs for credit rating agencies.
- We are placing our 'A-1' short-term rating for Moody's on CreditWatch with negative implications.
- We expect to resolve the CreditWatch listing in the near term.
Rating Action
On June 29, 2010, Standard & Poor's Ratings Services placed its 'A-1' short-term rating for Moody's Corp. on CreditWatch with negative implications.
Rationale
The CreditWatch listing reflects our view that an increased level of business risk is likely following the announcement that the Financial Reform Conference Committee has reconciled bills from the U.S. Senate and House, and that the agreed upon legislation could result in a change in the applicable pleading standards for certain litigation brought against rating agencies. According to our ratings criteria, we place ratings on CreditWatch when, in our view, there is a 50% chance or more of a rating change, and CreditWatch reviews can be the result of regulatory changes' impact on an issuer's business.
The agreed upon legislation contains a provision whereby investors may be able to sue rating agencies if they can show that the agency knowingly or recklessly failed to conduct a reasonable investigation of the factual elements relied upon by a credit rating agency's rating methodology, or obtain a reasonable verification of those factual elements from independent third-party sources. While we believe it is likely that the new pleading standard will lead to an increase in litigation-related costs at Moody's, whether the new pleading standard would potentially increase the likelihood of successful litigation against Moody's will be determined in the future by the courts. Moody's management has stated that it plans to adapt its business practices in an effort to partially offset any potential new litigation risks associated with the legislation. Nevertheless, we believe that Moody's may face higher operating costs, lower margins, and increases in litigation-related event risk, which would likely increase its business risk (see discussion under Litigation in our Encyclopedia of Analytical Adjustments for Corporate Entities--part of our Corporate Ratings Criteria).
In addition, if the final legislation removes many or all references to nationally recognized statistical rating organizations (NRSROs) from federal regulations, it may reduce investor demand for ratings. While we believe the latter change is unlikely to meaningfully impair Moody's business position over the near term, we plan to consider its long-term impact. As per our criteria, greater business risk and lower profitability would be key factors in a potential downward revision of our evaluation of Moody's business profile or a potential rating downgrade. In addition, Moody's business will likely undergo noticeable changes due to new global regulations and the U.S. legislation's impact on industry risk, which are business risk considerations under our criteria.
While a potential weakening of Moody's business profile is the driver for our CreditWatch listing, we will also consider the potential longer-term impact on the company's financial profile (see our business and financial risk profile matrix under the Analytical Methodology section of our Corporate Ratings Criteria). The company currently has a strong financial profile, in our view, as demonstrated by good levels of profitability, a high level of conversion of its EBITDA generation to discretionary cash flow, low leverage, and high cash balances. At March 2010, Moody's EBITDA margin was 46%, the company's conversion of EBITDA to discretionary cash flow was 45%, our measure of total lease-adjusted debt to EBITDA was 2.0x, and cash balances were $504 million.
CreditWatch
We anticipate resolving the CreditWatch listing over the near term, following our review of the final legislation and its potential long-term impact on Moody's business position. In the event of a rating downgrade, we do not anticipate the short-term rating would be lowered to below 'A-2'. An affirmation of the current 'A-1' commercial paper rating would likely involve a conclusion that the final legislation and new global regulations would not increase risk to Moody's business position.
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Hooooray! We're Saved!
Who knew that the end of everything would be so entertaining?
++++
giggle, giggle
+1000
Epic hilariousity!
It used to scare the shit out of me. Now I can't help but feel like a bit of a lunatic, actually enjoying it.
More popcorn please.
It's the end
of the world
as we know it ...
and I ... feeeeeel .. fiiiiiiiiine ....
Entertaining, indeed. I'm waiting for Bernanke to arrive at his next "save the world" meeting on a unicycle, wearing a red wig, red nose and big red shoes, while spinning 13 dinner plates on his head.
That would certainly distract from the global implosion.
Maybe the whole Federal Reserve Board, with Geithner and Summers, arriving dressed as you describe, all emerging from a '65 VW Beetle.
Make it a SmartCar. What with them being so smart, and all.
Who knew that the end of everything would be so entertaining?
Only entertaining if you're prepared for the shitstorm with the Au.
and ammo.
May I recommend something to put ammo in?
http://www.smith-wesson.com/webapp/wcs/stores/servlet/Product4_750001_75...
LOL
+1
You know I never thought credit rating agency news would make me laugh.
Well there you go.
This is truly hilarious. Even my non-hi-fi friends understand how dumb this is.
Translated to 6 year old:
Moody's: "You stink!"
S&P: No, YOU stink!"
Do not!
Do too!
etc...
...and for us perpetual 12-year olds:
SPY vs. SPY !!
http://www.myfreewallpapers.net/cartoons/wallpapers/spy-vs-spy.jpg
Cool, a Mexican stand off, S&P just pulled the trigger!
Circular phaser firing squad.
Couldn't find a version without the sound effects, but perhaps it's better this way:
http://www.youtube.com/watch?v=8qj8mLv9um8&NR=1
and shot themselves in the head...same way TD got taken out
No Mexican standoff. Until now it was mostly a circle jerk, but now S&P got fed up and declared 'Hey guys, look, Woody has a limp dick'.
You just can't make this stuff up! I'm telling my mommy!
Mommy = Warren Buffet?
Thank god Obama is sure that everything is ok and US economy is strengthening.
Sleep well.
LOL
Joke of the week
I admire the VP who carry out this downgrade [burning some bridges eh]
I said the same thing in a conference call and everyone started laughing. With my thick spanish accent people understood: "Don't burn some bitches". Either way bridges or bitches they were definately burned. How long for the payback?
I'm sure the other side [i.e. Moody's] would understand and the associate/VP probably gave them a heads-up prior to this PR move [scratch yours and you scratch mine]
Besides, upon receiving their year-end bonuses [whatever that's left], they will probably need each other's ref' to jump ships
Freaking awesome!
Soon GS will be asking for more regulation and Kapitol controls and the SEC will acknowledge that there are 4 special TBTFs that they will no longer bother to waste labor resources auditing or even looking at their business services and products.
Tyler: "John Nash would be so proud."
I wish I were as smart as you!
Damn you are good.
i had to wiki nash, too.
No, I knew who he was.
I even saw the movie, "A brilliant mind."
Just seems funny when "equilibrium" doesn't work.
Some of the people here are real smart and can easily think in terms of game theory etc. (Unfortunately, I'm not one of these)
He really is. The High Level Game Theory approach to rating agency mutual destruction.
I thought Nash made cute little cars?
In other news: Adidas just announced that they think Nike sucks and Coca-Cola has downgraded the entire Pepsi line, from Sierra Mist through AquaFina.
Lindsay Lohan thinks Paris Hilton is a dolt - downgrade!
Hey that's my line
On a lighter note, the Dow was down 250 points yet ZH stayed up all day!!!!!
Hooray for the new servers!!!
F
A
R
+1041
+865, just ask Goldman.
But my day is not complete without ... S L I D E
There I feel better.
Patience Turd, I'm processing EUR sell orders over here.
+++
how's this any different than GS downgrading MS? Its all BS to me, with a side order of milk spiting hilarity!
"Petrified, Mortified, stupified by you"
Moody's downgrades Moody's and S&P downgrades S&P.
For the record, I would short or get any protection you can on any debt owed by Me.
Mako, that's a great idea!
I wonder if I could bundle together all the debt I'll never be able to re-pay. My mortgage. My car loans, my credit cards. Sell it all off in one big CDO.
Then I could short my own CDSs on my CDO. I'd make so much fucking money I might actually be able to pay off my debts. Hey, wait a minute...
Best laugh I've had all year. I've saved it.
This financial disaster is just so damn FUNNY!
... isn't that what goldman sachs did? hehehe
Hey, wait a minute...
Exactly, you could be playing with fire. End up owing billions on derivatives of multiples of defaulted debt that never existed.
(Or something like that. I don't have a PhD in economics, and anyone spreading rumors that I do will hear from my lawyer.)
Word.
"Insanity: doing the same thing over and over again and expecting different results"-Einstein
Guys you haven't seen crazy yet. Hold on to ya'lls hats, Kansas is going bye-bye.
Ahh the autophagous hydra - such fond memories...
having already walked away fromt their houses, people in worse-off states now walking away from cars:
http://economy.ocregister.com/2010/06/28/unemployed-dumping-car-leases/35647/
"The unemployed are walking away from their car leases in droves as more laid-off workers see their jobless benefits cut off, reports LeaseTrader.com."
"The company, which helps match up people who want out of their car leases with those looking for a shorter-term lease, said it expects to process 7.3% more listings in June from people whose unemployment benefits have ended or are about to end."
"Unemployment benefits have been keeping millions of Americans afloat since the recession began," said Sergio Stiberman, chief executive of LeaseTrader.com. "When the clock runs out on benefits, people still jobless look to find ways of further cutting their bills. The ability to transfer a car lease contract can save a person more than $500 each month while keeping their credit intact."
"The company said the majority of its lease listings are in California and other high-unemployment states including Florida, Arizona, Nevada and Michigan. California's unemployment was 12.4% in May, third highest in the nation."
LeaseTrader.com noted the surge in listings coincides with the failure by Congress to approve HB 4213, a bill that would allow extended unemployment benefits through November.
The California Employment Development Department estimates more than 234,000 laid-off workers in this state alone have had their benefits cut off since the last unemployment extension bill expired in early June.
Don't blame anyone one bit if they don't pay. Matter of fact the money they can save not paying, and it will take the car company a year to get the car if you park it somewhere, you can then let them take the car, and go buy a used car for cash that has no payment and doesn't require $500 a month collision insurance coverage.
Everyone in this country needs to start NOT PAYING!!!! These bankers have no morals or ethics, so why should we worry?
If you are paying $500 a month for collision insurance, then you are 16, newly licensed and already have 2 DWI's within the first week.
I was just being sarchastic CD, but not far fetched by any means depending on where you live. Having said that, I did add my son a couple months ago to my insurance and it went up $1100 every six months. Now I'm paying $1800 every six months. Yay for me right? LOL
A NorCal bank my spouse is affiliated with, which made non-dealer car loans, has been having people drive cars into their headquarters parking lot, park and lock the car, and toss the keys into the reception area and just say "Can't service the debt - here ya go!" for the past year.
What, no valet service?
That could be next for "make work" with some stimulus money if they target it this way.
I lived in Yugoslavia once, before the recent civil wars, and make work was the name of the game. One hole in the ground with one blue outfit worker down in it with a shovel. 6 other guys in the blue uniforms standing around the hole talking, leaning on shovels, drinking coffee or slivovic. Saw it almost everyday, one place after another. To mail a letter required 3 different ink pad stamps at one window, a postage stamp at another window, and payment to the cashier at another window. Nearly full "employment" though.
That's the standard New York "work" crew arrangement for patching giant potholes in the roads.
Wonder if we will see the same impact on cars that we have seen on housing....huge glut and rapid downturn.
I like the thought of people on unemployment leasing cars for $500/month. It's only AFTER the benefits run out that they can't have their Lexus SUV any more.
I've tried to understand auto leasing multiple times and I just don't get it. All the value in a car basically comes in the period between paying it off and driving it into the ground.
The value is that the people in the McMansion next door think you have money becaue you're driving a new car every couple of years. Meanwhile they're leasing cars to make you think they have money. A microcosm of the whole Ponzi scheme.
Only In America Baby!!! LOL
All of 'em: to jail.
Deep Shah.
In further news Moody's put S&P on Double Secret Negative Probation with no rights to bowl games should they actually follow through with a downgrade. Hence, Moody's will no longer refer to S&P as "Standard and Poors" but call them "Suckers and Putzs" because they failed to rate the various derivatives and banks properly during the recent crash of 2008 also.
Next will be GS talking smack on MS, BAC vs JPM, cities vs States. They will turn on each other covertly as desperation sets in.
There will be no need for pitchforks when they finally take to fragging each other. I'll keep one handy anyway.
The whole freakin world econoy is about to crash, they could downgrade just about anyone without threatening their 20percent track record.
I remember several times people posted that when the crooks start turning on each other and attacking each other, then the market would begin its crash into oblivion. I think we are starting to see it.
I won't take credit for that but I always call the Fed/Political/Corporate/Lobbyist/Media cabal the self immolating hydra, or self consuming, autophagous, beast turning on itself.
There is no honor among theives.
The question is...will they tag-team with Fitch and Dun&Bradstreet? Or is the next round a Battle Royale? (with cheese)
"Aye fart in your general direction!!!"
Uh no you did-nt!
I wonder if there a derivative for S&P moody's ratings ?
You know the economy is bad when it smells of desperation and desperate people do desperate things.
ba ha ha ha ha ha ha
S&P will end up with the best goddamn buggy whip you ever saw. Too bad all the livestock will be dead by that point...
The best news I've had all day! Downgrade to the end!
This sounds like open market competition. An Onion headline nowadays, indeed.
Warning shot...
I am surprised no one is thinking about this in terms of strategy.
Why do this?
Is this a warning shot to Moodys not to go off the reservation? Or a punishment for ways they already have gone off the reservation?
I think Moodys may be getting ready to break something big, and those threatened are trying to reign them in. "Stay on script or else." "Get with the program or we all collapse."
You are probably correct.But...it is still hilarious.
A warning from certain sovereigns is my guess.
I dunno...that sort of thing seems like it would have happened in closed meetings, or a secret phone call between CEOs or something. To get to this point, of the public spectacle, seems like the situation has to be pretty devolved and desperate already. Who knows what could happen.
Stay tuned for the next episode of Punch and Judy...
A bare-knuckle cage fight, and then consolidation.
Whichever one ends up the least damaged will scoop up the ashes of the industry, and move forward the victor. A pyrrhic victory to be certain, but at the end of the world you take what you can get.
Keep in mind that after the global economy is gone there won't be much of a financial industry left. But there will probably be one of everything; one rating agency, one clearing house, one rich guy buying precious art, one TBTF bank, one liquidity provider. And so on. Sort of like how the whole thing started in Italy in the 1100s.
Not joking. Not even close.
.
Wonder how long till they open up debtors prisons if we all stop paying. I have seriously been considering telling my creditors I am sending them an amended agreement as they often send to me and let them know I will be paying each of them $10 a month until hell freezes over.
Nice.
I like the cut of your jib.
I called up my bank recently and told them I was planning on having a "Debt Offering" for myself and I wanted to see how much they'd be interested in purchasing.
They hung up on me.
I'm sure S&P would be happy to give you a AAA rating, that might help.
You should downgrade your rating of that bank.
You just can't make this stuff up. Hilarious!
Pretty soon the undersea monster with a trumpet nose that sucks up its victims will suck up the entire comic strip, and then itself. And that, friends, will leave us in Nowhere Land . Or was it The Sea of Holes?
"Auggh! We'll be sucked into oblivion!"
"Or even further!"
lol John Nash, lol Moody's, lol everyfucking thing. Im off to take some LSD and play with my electricity meter.
This stuff might actually make some sense to you if you take enough LSD.
Mr Nixon,
I want to apologize for the other night; you were right. My tone was obnoxious, and I acted immaturely. I am sorry.
Sincerely,
LH
And I overreacted, so I am also culpable. As far as I am concerned there is no problem between us. I look forward to conversing with you in the future.
hug it out, bitches
Sir/Madam, I've taken LSD, LSD is my friend, and NO amount of LSD could illuminate this mess! Perhaps some Bozonium would.
i believe its called ratings canabalism
Let me get this straight. Yesterday the market was on a high with the tobacco sector. Edward Bernays comes to mind.
Torches of Taxation
http://www.youtube.com/watch?v=RSdrYJOvr3Q
Today, posters are talking about John Nash & his No-Bel 'Game Theory' debacle. Oh my fucking word. Have a look back in time.
The 1994 Laureate in Economics John Nash reflects upon on the impact the Nobel Prize has had in his life.
http://www.youtube.com/watch?v=olPnTrLSYn4
It boils down to repeating the same mistakes & 'HOPE' you land on a new revenue stream.
Ring, ring.
-Hello?
-We need to pass the INTERNET, Climate Bill immediately or this financial model is going to craw up your ass.
-Understood! Click
These Fucking parasites couldn't find there way out of a paper bag if they were equipped with a box cutter and box of matches.
When I read the headline of the finest newspaper in the world, ZeroHedge, (S&P Puts Moody's On Downgrade Review) my back hit the chair I was sitting in and I cackled.
Then I read this.
“We are now at the point where one can only sit back and cackle as the insanity unravels.”
Now anybody can take me apart on this (or junk).
But exactly what insanity are we in now where one “rating” agency downgrades another “rating” agency.
These are the liars and fraudsters that anointed the debt/credit bacchanalia.
These are the liars and fraudsters that gave a religious credence to licensed banks creating “money” out of thin air.
Both of these agencies gave AAA to patently insolvent banks/sovereigns.
And now they eat each other for gain.
Cackle
Cackle
Cackle
Cackle
pot, meet kettle....
You folks really didn't expect that S&P would upgrade their competitor? This is the financial equivalent of the military MAD aka Mexican Stand-off. Now they have pulled the trigger.Ooopsie
“You folks really didn't expect that S&P would upgrade their competitor?”
I am unsure whom you include in “folks”.
I am not one.
The rest may speak for self.
It's a GRAND COMEDY my friends, a GRAND COMEDY...... Econolicious
Do not worry, Comrades. Party knows what it is doing.
Moody's critical mistake was calling into question the AAA rating of the US government, which then anointed Standardless Whores to be the survivor of the NRSRO finreg crackdown kabuki. Standardless Whores will keep their AAA rating on Treasury paper long after we are using it for bathroom tissue. Because for logical positards, saying makes it so.
THIS is what I was talking about up thread. Moodys was not being a team player, time for a blanket party.
Ok so far this week. S&P downgrades Moodies. FBI downgrades russian spies. BP downgrades getting hurt by oil spills. The fed downgrades bloggers. Masseuses downgrade Al Gore. Massive amounts of companies downgrade Dell for selling them leaking computers. US navy downgrades Iran. President of North korea sends US a 75 trillion dollar bill for pain and suffering. Main stream media is completely schizophrenic.
http://www.youtube.com/watch?v=lLWwWsM22eY
LOL i was legit laughing when reading this.
Tyler, posts like this are the reason we are all in this business: the pure comical insanity of it all.
There was a quartet on the deck of the Titanic, now we have you....
Oh my f*cking god. I thought april fools day was on 1 of april! LOL
Actually Moody can use this situation and downgarde itself thus returning the confidence of the market in it's fair rating methodology.
It is 'Dog Eat Dog' world......take no prisoners....... although S&P forgot to downgrade that ol' DIRTY DAWG named Fitch...... BITCH.
Pot calling Kettle ROFL
I'm not Chumba Bumba Numba Rotumba or anyone else...
No, you're not.
What a bunch of slowpokes those rating agencies, Zerohedge downgraded them last summer.
Certainly a lot of details like that to take into consideration. Thanks windows vps | cheap vps | cheap hosting | forex vps