Just today, effectively the US government has hit their debt ceiling. Translated, they are unable to pay their bills. Although the US government is now initiating measures so that they could fund their operations until 2 Aug 2011, the whole issue is that they are effectively going bankrupt.
And guess what's the US government's credit ratings now? Still AAA, the highest credit rating. Then what on earth is the credit rating for? An organisation is close to not being able to fund their operations and the credit rating is still unchanged?
It would seems that ratings given by rating agencies may not be that useful at all.
2 comments:
I recommend the movie "Inside Job" (2010). This is a docu-movie on the recent financial crisis. Matt Damon is the narrator. This movie was not screen locally, so you will have to get it online (plenty of sources on BitTorrent).
While watching it, I can't help but think of Singapore being modelled like the USA before the crash, especially when the graph of the housing prices appear. PM Lee appeared for a while and what he said caught my attention: "once you find a way of creating something out of nothing, it becomes very irresistable!"
I've not watched it. You meant that PM Lee appeared in the "Inside Job"?
I agree with that statement. I have spoken against something related called naked short selling here: http://chantc.blogspot.com/2010/09/restrictions-for-naked-short-sellers.html
It's as what he said. Creating something out of nothing. And yet SGX allows it even though with CDP, they can track all these transactions.
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