Crashing Credibility

From Bloomerg, we have Moody's, S&P Lose Credibility on CPDOs They Rated.

Moody's Investors Service and Standard & Poor's, the arbiters of creditworthiness, are losing their credibility in the fastest growing part of the bond market.

Really?!? No way, dude!

The New York-based ratings firms last month gave a new breed of credit derivatives triple-A ratings, indicating they were as safe as U.S. Treasuries. Now, investors are being offered as little as 70 cents on the dollar for the constant proportion debt obligations, securities that use credit-default swaps to speculate that companies with investment-grade ratings will be able to repay their debt.

``The rating doesn't tell me anything,'' said Bas Kragten, who helps manage the equivalent of about $380 billion as head of asset-backed securities at ING Investment Management in The Hague. ``The chance that a CPDO won't be triple-A tomorrow is a lot greater than it is for the government of Germany.''

S&P's rankings ``are appropriate for existing CPDO structures,'' S&P spokeswoman Felicity Albert in London said.

You'd have to have an IQ of a lobotomized amoeba to believe these ratings.

On the bright side, you will get a job running a pension fund.