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February 22, 2013
18:31 // 1 year ago
December 5, 2011

S&P could downgrade Euro countries’ credit ratings, because they’re no fun

  • 15 number of European countries S&P put on ”creditwatch negative,” meaning that there’s a 50/50 chance of an upcoming downgrade; all use the Euro as currency
  • two number of countries that didn’t get the Euro which didn’t receive the downgrade — Cyprus (which already is “creditwatch negative”) and Greece (which is Greece) source

» A serious dent in the stock market’s mood: Earlier in the day, things were looking up — France and Germany, the two responsible parents of the region, pushed a new treaty to convince the rest of the region to shape up, and Italy’s Mario Monti made a good impression on investors by introducing a sweeping austerity plan in the country over the weekend — but the S&P decision sucked the life out of the room. It’s not the first time S&P has played the heavy, either.

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19:58 // 2 years ago
August 18, 2011

S&P facing Justice Department scrutiny over mortgage securities ratings

  • what The U.S. Justice Department is investigating whether S&P kept the credit ratings on certain bonds backed by mortgage debt higher in an effort to protect the company’s business concerns.
  • why See: The financial crisis, which happened in part due to toxic mortgage securities that had inflated credit ratings. S&P’s ratings played a huge role in this whole mess, BTW. source

» And in case you were wondering: This investigation began before S&P lowered the U.S. credit rating, though there’s a good chance it will now be informed by it. Anyway, if you don’t understand the credit ratings issue, here’s a good way to put it: Companies pay the agencies for high ratings.  Kinda like if Warner Bros. paid Roger Ebert to recommend the latest Harry Potter movie. Now imagine if Ebert recommended “Birdemic" based on his financial interests. This would be extremely unethical behavior for journalists. But did S&P do something like that?

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11:22 // 2 years ago
August 17, 2011

lorim says: I still don't get the Fitch / Abercrombie joke, since John Knowles Fitch (founder of the ratings agency) isn't the same as Ezra Hasbrouck Fitch (co-founder of the clothing company). But perhaps I'm over-thinking this one?

» SFB says: Think about it this way: How many people know this particular piece of information? Let’s go back in time. Pretend you don’t know who either of those guys are and we’re just making a joke about the fact that a credit agency has the same name as a clothing company that The Situation wears. We made the joke without knowing this particular piece of information, and it’s funnier that way. :)

10:57 // 2 years ago
August 5, 2011

whyarethegoodurlsalreadytaken says: I'm a bit confused with this ratings downgrade. Now that we were bumped down, what exactly does it mean? How will it (or will it at all) change our day to day lives as Americans?

» SFB says: To put it simply, it’s going to become harder to borrow. Interest rates will go up, mortgages and loans will become harder to get, and you might feel it in your own credit rating. That sucks.

22:09 // 2 years ago