by onlinejen22 384 days ago · link · parent · post: Paul Vigna: If Spain Gets Downgraded in a Forest…
Why does the S&P rating carry any validity any more?
by smoorman1024 384 days ago · link
In theory a ratings agency could pool the combined resources of investors to provide a level of service that the investors individually could not obtain. If the pricing model skews the incentives of the ratings themselves to benefit those doing the selling rather than buying you have a problem. At the same time you have a tragedy of the commons issue if you look for revenues from the buyers.
by smoorman1024 384 days ago · link
Tangential, I used tragedy of the commons here but that may only apply to depleting a shared resource. What I am trying to say is that individuals would chose not to pay for the ratings or get them by dissemination from another investor, thereby making the revenues of the agency weaker. I might throwback to Kahn and say tyranny of small decisions might be a better reference.