Wednesday, December 17, 2008

More Ratings Agency Voodoo?

So, Moody's has a double barrel this week, downgrading both Goldman and Morgan Stanley to A2 from A1.

Goldman has $110 billion in excess liquidity on a balance sheet of $885 billion. They've cut compensation by $10 billion (in half).

Goldman's competitive position has never seemed stronger, with the competition boxed-in, and the idea that "investment banking" (or even trading) is finished for good is pretty radical.

Accordingly, it looks like the ratings agencies are practicing a bad voodoo.

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