Do we need rating agencies? -- MoneyWeek investment tutorial

http://www.moneyweek.com Rating Agencies have made headline news in recent months, with several high profile sovereign bond downgradings on the back of the global financial crisis.

Tim Bennett, Deputy Editor of MoneyWeek takes a closer look at rating agencies revealing what it is they really do and asking the question 'do we really need them?'

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Category:

Education

Tags:

• tutorial
• analysis
• educational
• finance
• investment
• economy
• rating
• agencies
• financial
• crisis
• bonds
• credit
• trading
• business

[MoneyWeekVideos]

episkyros - the bottom line is we are stuck with them, like it or not (and I don't much!). Agree they have tried to restore their battered corporate credibility (post Lehmans etc) in the sovereign debt markets. All rather cynical IMO. Tim.

[1elgalle1]

ambiguous

[simkusdonatas]

My personal opinion:

1. Rating Agencys should pay a Fee if AAA or any other higly rated company or Government went bust.

2. Companys want to be rated must pay fees to the government or some kind of fund and if Rating Agencys is right can get they fee.

[simkusdonatas]

3. It can be all companys extra taxed amount depends on revenue and Rating Agencies paid by government undependable which company they rate. Rating Agencies rating companys doesnt matter any more which they rate.

4. There must be lots of Rating Agencys so rate can be count on average.

[episkyros]

Good presentation! Only one complaint: the question DO WE NEED RATING AGENCIES? is not answered explicitly. As the presenter says at 13:50, "call a spade a spade"-- rating agencies are opportunistically inefficient, to put it charitably. In the case of Portugal, the rating agencies have overplayed their hand, downgrading that sovereign debt gratuitously, distortioning the financial market against the government, which lost a parliamentary vote of no confidence as a result of the rating!