One thing that professional bank and fund traders know that others may not is to absolutely never trust the credit rating agencies in making trading decisions. The reason for this is simple: the credit rating agencies are paid to give a rating on the creditworthiness of the very company that is paying them for that rating. This cozy arrangement – and the agencies give ratings to countries, companies, and asset issues – was a principal reason why the U.S.’s own Financial Crisis Inquiry Commission (FCIC) set up by Congress and the President in the aftermath of the great financial crisis that began in 2007/8 concluded that the “failures” of the ‘Big Three’ credit ratings agencies (Moody’s, Standard & Poor’s, Fitch) were “essential cogs in the wheel of financial destruction [and] key enablers of the financial meltdown.” Although the 2006 ‘Credit Rating Agency Reform Act’ was intended to break this […]