Archive | April, 2010

Paul Krugman on the ratings agencies

27 Apr

In my role as Chair of NZCU South, I have recently been a participant in a credit rating process conducted by Standard and Poors on our credit union.  We ended up with a respectable BB rating.

Forced on us by recent government regulation, it was an interesting process.  I will spare you my grief over a small $100m South Island financial cooperative being forced to spend members’ equity on an expensive international credit ratings regime.  What I will say is that I was pleased to see Standard and Poors working to a clear and unambiguous assessment framework as they worked through the process with us.

Sadly, a recent New York Times column by Nobel Prize-winning economist Paul Krugman suggests that this has not always the case with ratings agencies.  Krugman points to the fact that:

…of AAA-rated subprime-mortgage-backed securities issued in 2006, 93 percent — 93 percent! — have now been downgraded to junk status.

His column cites rating agency emails uncovered in the US Senate’s Permanent Subcommittee on Investigations.  These show clear conflicts of interest in ratings agency work.  Wall Street firms would:

…direct their business to whichever agency was most likely to give a favorable verdict, and threaten to pull business from an agency that tried too hard to do its job.

Krugman briefly considers what can be done to avoid the same scenario developing again, though without coming up with a firm recommendation.  Read his column on the New York Times site here.

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US Navy to launch Great Green Fleet

21 Apr

The US navy is set to be both green and mean with the dawning of an new eco-friendly assault force that will mind its carbon footprint as it destroys its enemy. It is to launch “the Great Green Fleet”, a fighting force of ships, submarines and planes powered entirely by biofuels.  The first group will be tested in 2012, and the navy plans for it to be operational by 2016.  Article in The Guardian

St James Conservation Area

16 Apr

The St James Station was purchased by the Crown in October 2008 as part of the tenure review process on high country pastoral lease land.  It has subsequently been transferred into Department of Conservation management.  This hit the news at the time as a great gain for recreationalists (NZ Herald article).  I just did not get it.  The farmed section of the St James Walkway had always struck me as being a particularly boring tramp.  But after an Easter of solo exploration my view has been drastically updated. Continue reading