Tuesday, January 04, 2011

John Moody

John Moody was born in 1868.  He went into Finance.  His company went bankrupt in 1907.  He founded a new company which eventually became Moody's Bond Rating Service. For some obscure reason, this service was one of only two agencies given the responsibility to forecast the  capacity of countries, yes - countries, to pay off their national debts.

In 1929, Moody's Bond Rating Service reporting on the U.S.A.: “prosperity which has characterized this country with only moderate setbacks since 1923 is likely to continue without great variation well into the future”.  In October that same very year, there was the Wall Street Crash and the beginning of the Great Depression.

So there we have it.  A company founded by an individual who got it all wrong and went bankrupt.  And a company which got it all wrong.

So what happens then?  This same independent company still has the job of reporting on countries.  The grading system is very very sophisticated: like AAA, BBB, CCC - that sort of thing. On the basis of that, taxes are raised, hospital beds are emptied, pensions are pared, jobs are lost.