Outlook What is the point of Moody's? By its own telling, it is to "provide investors with a simple system of gradation by which future relative creditworthiness of securities may be gauged".
In English: it predicts how likely banks are to go bust.
Score so far: Global financial crisis: 157 – Moody's: 0.
Moody's, along with the other ratings firms, entirely missed the coming of the credit crunch and all that followed and seems to survive purely on the sheep principle that as long as you stick with the crowd no one will mock you too much.
Its latest downgrade of Barclays is close to laughable and seems to have come from a headline-hungry PR department eyeing the chance for some easy coverage.
The ratings agency has moved its opinion on the bank's financial strength from stable to negative. Why? Because there are "shareholder and political pressures" (when aren't there?) and because of "disruptive management changes" (well done for noticing).
It's not as though Barclays is going to struggle to replace Bob Diamond, not when the going rate for the job is at least £7m a year even if you make a hash of it.
All Moody's is doing here is reacting to newsflow, rather than conducting a serious analysis of the bank's finances. It is, as usual, behind the curve and off the pace. Notonly can it not predict the future, it can't even predict things that have already happened.
None of the reasons for its alarmist call are new and most of them aren't relevant.
A better judge of banks is Crispin Odey. The hedge-fund guru thinks Barclays is "the cheapest bank in the world" and has been buying Barclays' shares with vigour. You could think about doing the same.