Simon English: Moody's is too slow to even go with the flow
Friday 06 July 2012
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.
- 2 Exclusive: Abusers using spyware apps to monitor partners reaches 'epidemic proportions'
- 3 Andy Murray takes to Twitter to show off his Christmas jumper
- 5 Top 10 travel destinations for 2015: From Haiti and Alaska to Namibia and Iceland
PlayStation and Xbox hacked by Lizard Squad
Exclusive: Abusers using spyware apps to monitor partners reaches 'epidemic proportions'
Margaret Thatcher 'expressed fears of Asian rising' at Anglo-Irish summit in 1984
UK weather: Travel chaos continues as train delays add to snow nightmare on roads
The 'Black Museum': After 150 years, public set to see exhibits from police’s grisly crime museum
British actor Idris Elba cannot star as James Bond because he is black, says shock jock Rush Limbaugh
Rozanne Duncan: Ukip expels councillor for 'jaw-dropping' comments made in BBC TV interview
Germany anti-Islam protests: 17,000 march on Dresden against 'Islamification of the West'
Ukip member gets into Christmas spirit with Union Flag plea to Santa 'for our country back'
BBC director Danny Cohen: Rising UK antisemitism makes me feel more uncomfortable than ever
Katie Hopkins speaks out on childhood obesity: 'Parents of fat children should be prosecuted for child cruelty'
iJobs Money & Business
Not specified: Selby Jennings: VP/SVP Credit Quant Top tier investment bank i...
Not specified: Selby Jennings: Quantitative Research | Global Equity | New Yor...
Not specified: Selby Jennings: SVP Model Validation This top tiered investment...
Highly Competitive: Selby Jennings: Our client, a leading European Oil trading...