The world banking crisis is far from over, and as this long-concealed Ponzi Scheme unravels and creates the greatest hardship for the evaporating middle class and the working poor (which latter group is rapidly growing), and others who pay their fair share of taxes and only ask their governments (via their central banking systems) to maintain financial integrity in the monetary infrastructure, keep their lifelong savings (such as they may be) safe from robbers, embezzlers and rogue traders, we are watching the dominoes fall.
What is sadder is that the world's most relied upon financial institution rating service, the "Oracle" upon whom all of the financial establishment seems to worship and fear, Moody's, has never successfully or proactively issued a warning about a bank's tenuous or precarious finances until after there has been a calamitous first substantial failure...then Moody's threatens to "downgrade" the credit rating of the offending institution. The institution lobbies, shows remorse, promises new "controls and safeguards" will be put into put into place, and that some executive will be thrown under the bus in a ritual sacrifice to the money gods. Moody's keeps the downgrade at bay so the bank in question can continue, for a bit longer, to do the things that it is best at:
1. Gambling, at high risk and the highest stakes, with earned and vested pension and savings monies;
2. Paying unconscionable non-performance based incentives, golden parachutes, and perquisites to its highest level of executive management and its wise and well-connected directors.
3. Constantly spending an increasing fortune of money, through a labyrinth of conduits, to "convince" the government to let banks, as an association, be self-regulating;
4. Planting their alumni into strategic government and regulatory policy-making or advisory appointments;
5. Never, ever going to jail. After all, a criminally charged entity doesn't fit in a conventional cell. It just pays a fine which puts some of its ill-gotten gains into the hands of the government -- need I continue?
After this idiocy has continued long enough for at least one more meaningful disaster to be uncovered (a "rogue trader" loses $20.0 Billion US, then Moody's makes a pre-emptive announcement of a downgrade to come, giving the offending institution a couple of weeks to make certain that bonus deals are signed, records are 'reconstructed' and alibis are corroborated. And to think [a vein is standing out on my neck now] that all a credit rating agency has to offer are its credibility and integrity.
Then at last, after most of the world having media access knows that the bank (or banking system of given country) is ridden with corruption and cancer, Moody's formally downgrades the offender's credit rating.
The following recitation of the obvious (better delivered post mortem, just for the record, than never I suppose) appeared in Yahoo News! today. Is anyone surprised? Please return after you've had a chance to review the article, and take a quick break in between to grab a cup of coffee or whiff some smelling salts to break the trance that this mesmerizing material will certainly put you into!
- Bank of America, Citigroup and JPMorgan are among the 15 leading banks whose credit ratings were cut.
Moody's is not, in any manner, predictive, although people would think that they were. They are supposed to be protective -- which they are not. No, Moody's is merely belated historian of the obvious, and a slightly snarky one at that -- they give offenders time to mount a defense and run off with a large sackful of depositor loot. Of course it would anethema to think that Moody's' insiders gained financially as a result of their access to the timing of their own news releases and ratings changes...
And what I fear, as many true Futurists do, is that they have accumulated so much influence, that they can play at the game of market-making instead of market-calling.
And with apologies to Tom Clancy, The Sum Of All Futurist's Fears is that this 'independent rating service' will fall, if it has not yet fallen, from its last perch of unassailability into the same polluted and incestuous pool into which international governments, bankers and other conflicted 'regulatory' bodies routinely go to wash each other's backs.
As you may recall, in 2006 - 2008, Moody's totally failed to issue any meaningful statements or downgrades regarding the mountains of mortgage financing companies, mortgage banks and brokers who were so terribly hyper leveraged (loaned out) against poor collateral (home values which were being increasingly articificially inflated by an environment of easy money and minimal due diligence) that they were being railed at as being one of the principal aiders and abettors (all of the derogatories that you can think of with the exception of co-conspirator). In fact, there was some talk of some compensation being given to the analysts and others at Moody's to "look the other way." This is akin to giving your company's independent CPAs a "special "bonus" -- illegal as well as unethical, to certify your fraudulent financial statements.
At any rate, they were irresponsible and caused, both directly and indirectly, a major negative disruption in the economy, especially in the housing and small business sectors.
In terms of the The Global Futurist Blog and its insight into the international economic future, this show of cascading sovereign and bank credit ratings by Moody's is a thinly-veiled attempt at salvaging of a tarnished reputation (theirs), and a preservation of world's wealth distribution curve, where an a shrinking percentage of the population owns or otherwise controls the vast majority of the planetary wealth.
Which side of the divide will you be on? One of the blessed masters, or one of the countless numbers of peasants with a standard of living far poorer than it is now.
One thing is fairly certain - this increased disparity in income distribution will lead to governments taking more aggressive action against their own constituents and citizens, and to the amassing of a great deal of business for private security firms and mercenaries to protect the coveted wealth of the increasingly rich. I believe that the governments of the world's largest industrialized nations are already in the planning and early testing stages of civilian operations. It frightens me.
Douglas E Castle
p.s. "I believe that either poor or compromised information is more dangerous than an absence of information." - DEC
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