Do not throw imprudence out with the bath water…throw out the power of the credit rating agencies!
Sir “Now the prudent will have to bear the cost of profligacy” says Martin Wolf, April 2, and before anyone misinterprets what I am sure Mr Wolf does not mean, let me remind fellow readers that from a different perspective imprudence can also be seen as one of the basic and most valuable driving forces there is in our societies.
Now if we are going to talk about imprudence, big scale, then let us discuss the appointment by the regulators of the credit rating agencies as risk measuring bureaucrats, as if anyone in a society can really know from what hole risks could jump at you.
That bank defaults are risky and bank crisis bad? Yes, but even more so banks not defaulting and thereby setting us up for the mother of all crisis; and so therefore, please, disconnect the markets from having to give special credence to the credit rating agencies, ASAP.
Now if we are going to talk about imprudence, big scale, then let us discuss the appointment by the regulators of the credit rating agencies as risk measuring bureaucrats, as if anyone in a society can really know from what hole risks could jump at you.
That bank defaults are risky and bank crisis bad? Yes, but even more so banks not defaulting and thereby setting us up for the mother of all crisis; and so therefore, please, disconnect the markets from having to give special credence to the credit rating agencies, ASAP.
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