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As the UK economy continues to dive bomb towards recession the Bank of England has given its most blatant indication to date that interest rates will fall again in January. The indication was that...
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Thursday 31st July 2008
As we continue the blame game on both sides of the Atlantic it seems that the credit rating agencies are next under the hammer with EU and US officials looking at possible prosecutions. The likes of Standard and Poors, Fitch and Moody’s are being blamed for a failure to warn investors that the ratings on some of their investments were in trouble.
It is alleged that after the credit crunch began in the US a number of highly rated investment instruments suddenly became untradeable and were affectively worthless. The argument of the EU and US authorities is the allegation that they did not keep sufficient notice of the changes in the market and failed to advise investors accordingly. However, while new laws are set to enter the EU law book and the US authorities look to prosecute some ratings agencies, not everyone agrees that they are to blame.
For the last few years investors have pushed share prices and property prices higher and higher to such a point as the only way was down. Banks and mortgage providers pushed themselves to the limit in their pursuit of profits with many ‘making hay while the sun shone’. This reckless pursuit of low margin business to increase profits was a disaster waiting to happen but when it did all go wrong, the speed was somewhat breath taking.
Surely everyone has to take their share of the blame? |
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