CREDIT RATING AGENCIES: IT IS ALL RELATIVE
Now that the fault lines of the United States Sovereign Debt downgrade is now behind us and perhaps even healing, what can we glean from the fact that it did happen? First of all let us not forget that S&P was instrumental in the whole financial crisis in the first place. However, they were not alone in this financial calamity. Fitch, Moody’s and a host of other players including the federal government is to be held accountable for the crime of greed.
Of course we could dance around why the Great Recession of 2008 and 2009 happened but that is another conversation. The reason for this article is that some financial and economic gurus are calling for a more transparent and accountable system where the rating agency is more independent and not beholding to the customers they serve. It was also suggested in an article in China Daily an op. ed. piece by Ahmed Sule that the BRICS nations could be a rival or competing sector with their own rating agencies. There is some merit to this idea meaning that there will be competition amongst rating agencies and since the rating agencies in question are coming out of the BRICS nations these rating agencies would have merit in a rating agency world gone mad.
However, I caution the reader that would take such an idea and run with it. First of all you have to consider the BRICS nations and their background. Brazil, Russia, India, China, and South Africa are not considered the most ethical of nations on this planet and considering this where does that leave our so called transparent rating agencies? Case in point, the credit rating agency is a product of the system of which it has come from. The reason why Moody’s, Fitch, and especially S&P got caught up in the collapse of the financial markets in 2008 and 2009 is because they did not want to be left out of the easy money bonanza. Of course, one of them and I mean only one of the rating agencies could have rated these investment grade products for what they really were and that was junk. The problem is competition takes over and the sooner one of them steps up to the plate ethically there goes their business. Now let’s say that competing rating agencies do open doors in BRICS or anywhere else the same pressures of the market will apply to them as well.
Besides, we are really missing the point in this whole discussion of transparent credit rating agencies and the point is that these agencies are run and manned by people. People are the same the world over and we are all subject to the same motivations of greed, lust, power, and the list goes on. I would argue that there is no matter how many credible rating agencies we have over the globe they are all part of a system that is imperfect and is subject to the frailties of the human spirit. This is not an indictment it is just an observation of where we are right now. The suggestion that BRICS rating agencies is a welcomed surprise and could in the short run offer something of an alternative for the global marketplace but in the long run will become victim of the very same thing that we are trying to fix and in essence will have little effect on the global financial system. Frankly the only way that the fix we so sorely desire will come about is the reflection of what we should be doing at the individual level. If we are to do this then we need to look in the mirror first.
To sum up, think about all of the different people both wealthy and not so wealthy that bought property they could not afford. They in turn compounded the problem by buying the property with enormous amounts of debt or leverage. Couple this with the bank or mortgage company eager to make these loans because they knew it was easy to unload these loans to an unregulated stock market which in turn convinced a number of rating agencies with business and money to mark these questionable products as investment grade, which was in turn sold to brokerage houses, government entities, individuals and partnerships alike. The common thread to this whole scenario is of course people. These people are linked by one common flaw and who knows you may not even consider it a flaw which makes more of what I am talking about more plausible of where our true problem lies, greed! This is the real problem and this is where we should have the discussion, can we regulate greed? Is the system of capitalism inherently flawed because it features the idea of greed as a possible cornerstone to its success and possibly its ultimate destruction? The credit rating agencies in all its forms are a mere cog in a system that we all play in and in fact the system itself might even be outdated which by the way includes these rating agencies, the idea of globalization, peak oil and anything else that you figured would collapse the system. We all need a new narrative and I am willing to start it now.
Tuesday, August 30, 2011
Monday, August 8, 2011
DEAR MR. PRESIDENT
I did watch a little of your speech just a few minutes ago and I do have to say it was not your best by far. I do understand that you are under enormous pressure and the vitriol of Washington has taken a toll on what I would call your inspirational appeal. However, it is more than inspiration that we need to get the country out of this economic and financial mess.
I am not going to blame you or anyone else for the downgrade of our credit rating or any of the other problems associated with the economy, lack of jobs, or our spiraling debt. What I am going to do is offer solutions to the problems at hand and exactly how you should talk about it. Now what I am about to tell you may not get you re-elected but it will clear your conscience. Are you ready? Here we go.
I would first of all get out of the blaming business this does not do anyone good and this forces all of your rivals into their respective corners so don’t do it. What you need to do is offer the hand of compromise and friendship to all that would accept. I would try to put together a grand summit that will include, Business leaders, Religious leaders, Political leaders at all levels, congressmen, governors, mayors all of them to hammer out solutions to these problems that affect us all. What you need to do to get them altogether is to have them sign a pledge that they will work together with you as Americans not Republicans or Democrats but as Americans to solve our problems. Have the summit open to the public, put live feeds on all the social media channels and encourage input from all Americans to solve all our issues. Contact Twitter like you did before to encourage this kind of debate.
My next point is for you specifically, own up and take responsibility for the mess. I know that you have done all you can to get us out of the deepest recession in history but guess what you are only one man and only one cog in a global system. Take your responsibility and then ask for help it is OK to do this the world has changed and the U.S. Is part of a whole; the economy is global and the whole thing is systemically sick nothing you can do about that all by yourself.
My last point is for the American people, the American people have not done their part to fix things they too are blaming everyone but themselves as we too have contributed to our economic woes by taking, taking, and taking some more. Reach out to them in the way that I know you can, you have done it before tell us the truth and offer solutions in a sense that we must all take ownership. We the American people have had it so easy for so long that perhaps we really do not know what it means to sacrifice anymore. I would hearken back to FDR when he approached the auto companies to tell them that they need to produce tanks, planes, and ships for the war effort. Of course they agreed to do this but they asked FDR, “but when are gong to have time to build cars Mr. President”? President Roosevelt’s response was, “you won’t have time”!!! This is the kind of leadership we need right now and quite frankly Mr. President I know you are better than this. Step up and lead and I have given you the blueprint for doing so. If it does not go your way then guess what your conscience is clear. You are my President and I support you and I am willing to sacrifice for the good of the country and for the good of the human race.
By the way we are all on the hook right now and we humans have to collectively get out of it. Will you lead the way sir?
Very truly yours
Dr. Duane C. Scott
I did watch a little of your speech just a few minutes ago and I do have to say it was not your best by far. I do understand that you are under enormous pressure and the vitriol of Washington has taken a toll on what I would call your inspirational appeal. However, it is more than inspiration that we need to get the country out of this economic and financial mess.
I am not going to blame you or anyone else for the downgrade of our credit rating or any of the other problems associated with the economy, lack of jobs, or our spiraling debt. What I am going to do is offer solutions to the problems at hand and exactly how you should talk about it. Now what I am about to tell you may not get you re-elected but it will clear your conscience. Are you ready? Here we go.
I would first of all get out of the blaming business this does not do anyone good and this forces all of your rivals into their respective corners so don’t do it. What you need to do is offer the hand of compromise and friendship to all that would accept. I would try to put together a grand summit that will include, Business leaders, Religious leaders, Political leaders at all levels, congressmen, governors, mayors all of them to hammer out solutions to these problems that affect us all. What you need to do to get them altogether is to have them sign a pledge that they will work together with you as Americans not Republicans or Democrats but as Americans to solve our problems. Have the summit open to the public, put live feeds on all the social media channels and encourage input from all Americans to solve all our issues. Contact Twitter like you did before to encourage this kind of debate.
My next point is for you specifically, own up and take responsibility for the mess. I know that you have done all you can to get us out of the deepest recession in history but guess what you are only one man and only one cog in a global system. Take your responsibility and then ask for help it is OK to do this the world has changed and the U.S. Is part of a whole; the economy is global and the whole thing is systemically sick nothing you can do about that all by yourself.
My last point is for the American people, the American people have not done their part to fix things they too are blaming everyone but themselves as we too have contributed to our economic woes by taking, taking, and taking some more. Reach out to them in the way that I know you can, you have done it before tell us the truth and offer solutions in a sense that we must all take ownership. We the American people have had it so easy for so long that perhaps we really do not know what it means to sacrifice anymore. I would hearken back to FDR when he approached the auto companies to tell them that they need to produce tanks, planes, and ships for the war effort. Of course they agreed to do this but they asked FDR, “but when are gong to have time to build cars Mr. President”? President Roosevelt’s response was, “you won’t have time”!!! This is the kind of leadership we need right now and quite frankly Mr. President I know you are better than this. Step up and lead and I have given you the blueprint for doing so. If it does not go your way then guess what your conscience is clear. You are my President and I support you and I am willing to sacrifice for the good of the country and for the good of the human race.
By the way we are all on the hook right now and we humans have to collectively get out of it. Will you lead the way sir?
Very truly yours
Dr. Duane C. Scott
Saturday, August 6, 2011
DOWNGRADE!!!
Well when you thought it could not get any worse it just did! S & P Rating Agency just downgraded the credit rating of the U.S. from its coveted AAA rating to AA+. Now a lot of you probably don’t really know what this means to you and your everyday lives and we will get you up to speed on that. What we ought to talk about is how we got here.
According to the S & P the main reason for the downgrade was the political brinksmanship played by both Democrats and Republicans in full view of the world over a procedural vote of raising the debt ceiling. What is so astonishing about this downgrade is that the S & P like the rest of us watched in horror as our so called political leaders behaved like children and still did not get the work done that was necessary to avoid the downgrade.
If I were to go further with this issue and it speaks to us as a people in this still great nation is that we are still not doing what we are supposed to do. How many of you when you go out and vote do so with the heart and not the mind? As a marketing professional I do understand the matters of the heart and what we call emotional appeals. Unfortunately this is where an emotional appeal and politics do not mix. The reason why our political leaders behave like children is because we behave like children when it comes to the political process. We absolutely must stop this behavior as it is going to destroy us all. If you don’t believe what I am talking about then you need to take a look at what is going on around you.
As I was watching the talking heads try to report this news and yes they were all looking for the silver lining. I could not help but to perk up to an analyst which said that it is time for our leaders to grow up into the positions that they now have. He also said that the political candidates running for president right now missed a golden opportunity to actually do something positive here and offer assistance to correct the problem. Instead we got more of the same where the candidates offered criticism rather than solutions. Speaker Boehner threw mud at the Democrats and Reid threw more mud at the Republicans which is self-fulfilling and justice for the S & P’s decision, don’t you think?
There is plenty of blame to go around here, American consumers have lived beyond their means and are still doing so, our politicians are reflections of the shortsightedness and arrogance of the American people, eight years of President Bush and his absolutely incoherent policies, and now President Obama where the shadow of his transformational leadership has fled. Yes, I too am to blame as I am just as responsible as everyone else because I have not done enough to educate, warn, educate, and speak about these issues that affect us all.
As a result of this it is time to come up with solutions and here is what I will offer up to the American people and perhaps our political leaders too if they even desire to listen. First of all folks try to get yourself out of debt. The reason why the federal government is in so much debt is because we are in so much debt. We spend way too much money and live beyond our means. We are so easy to take, take, take but never offer anything of value it is time for this to happen. Secondly, and I have been talking about this for years now, start your own business. It is so easy to start a business these days and with little to almost no capital. We have to remake ourselves here and entrepreneurship can get us there. My next point of advice is a true measure of success for the human race, sustainability! If you are going to start this business of yours think along the lines of an enterprise that is sustainable. Get onto the Internet and type in sustainability and business and play with the terms a bit I am sure something will come up that interests you. My last point, at least for this article is start to save and invest more in yourself in the form of education in the math and sciences, invest in your children and invest in America. Quit taking and start giving more and if you invest more you will undoubtedly get more back that should be used in a sustainable way.
Charles Darwin once said that it is not the strongest of species, nor is it the most intelligent that staves off extinction but the one that can adapt quicker to change. Let’s just hope that we can adapt to this rapidly changing environment and make it better for us all. Pray also if you want to we need all the help we can get but prayer without action is useless.
Well when you thought it could not get any worse it just did! S & P Rating Agency just downgraded the credit rating of the U.S. from its coveted AAA rating to AA+. Now a lot of you probably don’t really know what this means to you and your everyday lives and we will get you up to speed on that. What we ought to talk about is how we got here.
According to the S & P the main reason for the downgrade was the political brinksmanship played by both Democrats and Republicans in full view of the world over a procedural vote of raising the debt ceiling. What is so astonishing about this downgrade is that the S & P like the rest of us watched in horror as our so called political leaders behaved like children and still did not get the work done that was necessary to avoid the downgrade.
If I were to go further with this issue and it speaks to us as a people in this still great nation is that we are still not doing what we are supposed to do. How many of you when you go out and vote do so with the heart and not the mind? As a marketing professional I do understand the matters of the heart and what we call emotional appeals. Unfortunately this is where an emotional appeal and politics do not mix. The reason why our political leaders behave like children is because we behave like children when it comes to the political process. We absolutely must stop this behavior as it is going to destroy us all. If you don’t believe what I am talking about then you need to take a look at what is going on around you.
As I was watching the talking heads try to report this news and yes they were all looking for the silver lining. I could not help but to perk up to an analyst which said that it is time for our leaders to grow up into the positions that they now have. He also said that the political candidates running for president right now missed a golden opportunity to actually do something positive here and offer assistance to correct the problem. Instead we got more of the same where the candidates offered criticism rather than solutions. Speaker Boehner threw mud at the Democrats and Reid threw more mud at the Republicans which is self-fulfilling and justice for the S & P’s decision, don’t you think?
There is plenty of blame to go around here, American consumers have lived beyond their means and are still doing so, our politicians are reflections of the shortsightedness and arrogance of the American people, eight years of President Bush and his absolutely incoherent policies, and now President Obama where the shadow of his transformational leadership has fled. Yes, I too am to blame as I am just as responsible as everyone else because I have not done enough to educate, warn, educate, and speak about these issues that affect us all.
As a result of this it is time to come up with solutions and here is what I will offer up to the American people and perhaps our political leaders too if they even desire to listen. First of all folks try to get yourself out of debt. The reason why the federal government is in so much debt is because we are in so much debt. We spend way too much money and live beyond our means. We are so easy to take, take, take but never offer anything of value it is time for this to happen. Secondly, and I have been talking about this for years now, start your own business. It is so easy to start a business these days and with little to almost no capital. We have to remake ourselves here and entrepreneurship can get us there. My next point of advice is a true measure of success for the human race, sustainability! If you are going to start this business of yours think along the lines of an enterprise that is sustainable. Get onto the Internet and type in sustainability and business and play with the terms a bit I am sure something will come up that interests you. My last point, at least for this article is start to save and invest more in yourself in the form of education in the math and sciences, invest in your children and invest in America. Quit taking and start giving more and if you invest more you will undoubtedly get more back that should be used in a sustainable way.
Charles Darwin once said that it is not the strongest of species, nor is it the most intelligent that staves off extinction but the one that can adapt quicker to change. Let’s just hope that we can adapt to this rapidly changing environment and make it better for us all. Pray also if you want to we need all the help we can get but prayer without action is useless.
Thursday, August 4, 2011
COLLAPSE
I have noticed that the Dow Jones Industrials Index is down more than 300 points in midday trading. I have also seen that there have been a flurry of comments and blogs seemingly blaming either Republicans or Democrats for a poor and sick economy here at home. What these writers fail to realize is that the blame does not fall on just one group of people but to all of us. First of all the U.S. economy is interconnected with every other economy and they to us so the economic malaise is global and for the most part needs a global solution.
First of all let’s point the finger squarely where it should be if we are going to blame anyone for the lack of jobs here in America. I would squarely put it on the American consumer. Think about it when you go out to shop for anything you usually demand the absolute best price you can get and this best price is usually the lowest price. Well if this is the case what do you think happens to the companies here that used to provide those products for you; they cannot compete especially if their competitors move their operations to; say China or India? You get the picture! Those American companies that were here now have to move offshore just to compete. There goes the jobs and by the way they are not coming back! Lower prices, better living, Wal-Mart. What they should really be telling you is; lower prices no jobs for you.
Look, this is just the tip of the iceberg and if you draw this out the whole economic system is unsustainable. Human beings just consume way too much of everything and I mean everything. The planet’s resources cannot keep up with us as a species on this present consumption path. We demand infinite growth in consumption on a planet that has finite resources so what do you think is going to happen… What is going to happen is that the species is going to collapse and there is nothing you can do about it when that happens but just survive, more on this later.
As for our government and all other governments elsewhere they are too focused on the old paradigm of consumption and this only compounds the problems of unsustainable growth. We as citizens demand that the idea of infinite growth continue and this just cannot happen. Which means, our political leaders are part of the problem because of our shortsightedness we will vote for those politicians that subscribe to the same shortsighted policies of yesterday that just does not work anymore. Now here is where it really gets interesting, we have competing views of the same outdated paradigm of consumption and when they are so polarized about an outdated view of economic growth (not sustainable) then nothing gets done. No jobs of any kind, no real growth of ideas for the new paradigm and well how can I say it no progress whatsoever. So if this is the case then economic, population, and total collapse is inevitable. Right?
Wrong; I don’t believe that perhaps because of my infinite optimistic demeanor. Here is what you can do now; first of all start your own small and sustainable business. If you type these key words into your browser/search engine all kinds of cool ways to get started in a new and exciting business will come up you are sure to find something that will fit your skill set. As a consumer we need to close our economic circuits, grow your own food (organic only), get your power consumption off the electric grid by installing solar panels and a wind turbine if the zoning allows. Your home can become totally self sufficient in terms of energy. Recycle, reuse, and redo, and hand them down’s always worked when I was a kid and because we were poor we knew how to stretch a dollar and Americans need to get back to those roots again. This kind of behavior is sustainable and the benefits to you could be immediate in cost savings, you can invest more in you and your community. With this kind of action you can have a closed economic system that is sustainable.
To close, I don’t look at these dire economic times as a problem I look at it in such a way that could get us on a sustainable path. In the long term this is what is best for all of us. I also know that a large number of humans are not going to do as I suggest and unfortunately these folks are going to fall by the wayside and if you are an elephant that is in a herd that is too large you will be culled. It is called natural selection; I intend on being here in the new paradigm making a difference, I am going to do my best to build sustainable wealth for my family and my community and that is the new paradigm. Charles Darwin once said, “It is not the strongest of the species that survive, nor the most intelligent, but the one most responsive to change”. How responsive are you going to be to the new paradigm?
I have noticed that the Dow Jones Industrials Index is down more than 300 points in midday trading. I have also seen that there have been a flurry of comments and blogs seemingly blaming either Republicans or Democrats for a poor and sick economy here at home. What these writers fail to realize is that the blame does not fall on just one group of people but to all of us. First of all the U.S. economy is interconnected with every other economy and they to us so the economic malaise is global and for the most part needs a global solution.
First of all let’s point the finger squarely where it should be if we are going to blame anyone for the lack of jobs here in America. I would squarely put it on the American consumer. Think about it when you go out to shop for anything you usually demand the absolute best price you can get and this best price is usually the lowest price. Well if this is the case what do you think happens to the companies here that used to provide those products for you; they cannot compete especially if their competitors move their operations to; say China or India? You get the picture! Those American companies that were here now have to move offshore just to compete. There goes the jobs and by the way they are not coming back! Lower prices, better living, Wal-Mart. What they should really be telling you is; lower prices no jobs for you.
Look, this is just the tip of the iceberg and if you draw this out the whole economic system is unsustainable. Human beings just consume way too much of everything and I mean everything. The planet’s resources cannot keep up with us as a species on this present consumption path. We demand infinite growth in consumption on a planet that has finite resources so what do you think is going to happen… What is going to happen is that the species is going to collapse and there is nothing you can do about it when that happens but just survive, more on this later.
As for our government and all other governments elsewhere they are too focused on the old paradigm of consumption and this only compounds the problems of unsustainable growth. We as citizens demand that the idea of infinite growth continue and this just cannot happen. Which means, our political leaders are part of the problem because of our shortsightedness we will vote for those politicians that subscribe to the same shortsighted policies of yesterday that just does not work anymore. Now here is where it really gets interesting, we have competing views of the same outdated paradigm of consumption and when they are so polarized about an outdated view of economic growth (not sustainable) then nothing gets done. No jobs of any kind, no real growth of ideas for the new paradigm and well how can I say it no progress whatsoever. So if this is the case then economic, population, and total collapse is inevitable. Right?
Wrong; I don’t believe that perhaps because of my infinite optimistic demeanor. Here is what you can do now; first of all start your own small and sustainable business. If you type these key words into your browser/search engine all kinds of cool ways to get started in a new and exciting business will come up you are sure to find something that will fit your skill set. As a consumer we need to close our economic circuits, grow your own food (organic only), get your power consumption off the electric grid by installing solar panels and a wind turbine if the zoning allows. Your home can become totally self sufficient in terms of energy. Recycle, reuse, and redo, and hand them down’s always worked when I was a kid and because we were poor we knew how to stretch a dollar and Americans need to get back to those roots again. This kind of behavior is sustainable and the benefits to you could be immediate in cost savings, you can invest more in you and your community. With this kind of action you can have a closed economic system that is sustainable.
To close, I don’t look at these dire economic times as a problem I look at it in such a way that could get us on a sustainable path. In the long term this is what is best for all of us. I also know that a large number of humans are not going to do as I suggest and unfortunately these folks are going to fall by the wayside and if you are an elephant that is in a herd that is too large you will be culled. It is called natural selection; I intend on being here in the new paradigm making a difference, I am going to do my best to build sustainable wealth for my family and my community and that is the new paradigm. Charles Darwin once said, “It is not the strongest of the species that survive, nor the most intelligent, but the one most responsive to change”. How responsive are you going to be to the new paradigm?
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