It's a reprint from NewsBred.
Indian Express went to some length this week in defending Moody's against Modi and the credit agency's view that the present Indian government could lose "domestic and global credibility."
Indian Express also quoted that New York Times has written an OpEd "The Cost of Hindu Extremism" in its November 3 edition. (For how NYT publishes US government's boardroom bulletins as news, read "So Wrong for So Long").
In doing so, Indian Express had only carried its itch of October 31 forward when it quoted Moody's Analytics on the "growing voices in the country against rising intolerance."
Alas, Indian newspapers are quoting from the devil's scriptures. This is the new terms of dispensation. It's time to put searchlight on Moody's (sorry fellas! You asked for it).
Actually, its not easy to list Moody's blemishes in chronological order. But since 2008 financial collapse was termed in Forbes by a US former treasury secretary as a bigger crisis than the 1929 Great Depression, it's a good point to start against a purely private, profit-for credit agency which is losing its sleep on India's "credibility." (watch the soiled front of your own pants, would you).
Moody's, along with Standard & Poor's and Fitch Ratings are the "Big Three" credit rating agencies of the financial world. These are the only approved entities by law, granted by the US government.
In 2008, these "Big Three" credit rating agencies (yes, including Moody's) were ranking Lehman Brothers as a secure investment just one week before its historic bankruptcy that set off the financial crisis. Many securities and bonds in the US that had AAA ratings in 2008 and were considered "safe" turned out to be a bubble.
The 2008 financial crisis--it resulted in the loss of more than 8 million jobs; wiped out $16 trillion wealth from homes and more than 12 million homeowners were submerged--was primarily due to Lehman Brothers.
Lehman Brothers filed for bankruptcy on September 15, 2008. It nearly imploded Wall Street. Within days, the insurer AIG had to be bailed out by the federal government. Investment banks such as Morgan Stanley and Merrill Lynch were pushed to the brink. Merrill, in panic, indeed was sold to Bank of America.
Lehman Brothers were borrowing large amounts of money to invest or gain "leverage" in the mortgage-backed security industry. As long as economy was stable, it was ok. But when the downturn came, it wiped them out. US--and European economy--hasn't still recovered from it. It was a typical Ponzi scheme.
According to the report submitted by the Financial Crisis Inquiry Commission in January 2011: "the three credit-rating agencies were key enablers of the financial meltdown. The mortgage-related securities at the heart of the crisis could not have been marketed and sold without their seal of approval."
In 2011, a senior vice-president of Moody's pulled the plug on world's leading credit agency.
William J. Harrington had worked in Moody's for 11 years before he resigned in 2011, upset by the manipulated ratings Moody's issued during the disastrous housing bubble of 2008.
Harriington wrote a 78-page long "comment" to Securities and Exchange Commission (SEC) and then made it public. It's a scathing indictment of Moody's processes, conflicts of interests, and management.