It is amazing how we, as humans, fail to see when we are being played. Time and time again, we fall for the same tricks. People lie to us and believe them. They lie under oath and we still believe them even though all our “spidey” senses are tingling.

In the world of finance, there are the victors and there are the vanquished. In between them, there are many people whose job is to pull the proverbial wool over our eyes. The only ones who ever make money are those who have rigged the game in their favor from the beginning. Of the many levels of liars that exist within this nasty world of finance is that of the ratings agency.

Basically a ratings agency is supposed to look at a company’s credentials and financial situation and then rate it based on the probability that it will be an ongoing concern should someone want to invest in that particular company. Each company has a different way of rating what it considers solid to junk. The funny thing is that most of what they do is junk. The reasons I say this are many and I will get back to this but for now, all you need to know is that most of these agencies don’t spend the proper amount of time with the companies that they are researching nor are they willing to place a serious downgrade if there are issues abound. Nothing can illustrate my point better than the fiasco of the financial meltdown in late 2008. When the heads of the three top ratings agency were brought before the US Congress to be questioned as to why they did not flag these problems before they spiraled out of control, to a man each said that what his company put out was “just an opinion.” Really? So companies pay millions of dollars just for an opinion? Either this issue is rigged from the beginning or there really must be stupid people out there willing to pay a lot of money for just an opinion. In one case just prior to the meltdown, there was a downgrade of a company’s debt from investment grade to junk within a couple of weeks. If you consider that such a move under normal circumstances takes months if not years and no one blinked over this is acceptable behavior then there is a problem. Moreover, when hardly anyone made a fuss at the time this happened really causes one to think about what exactly is the role of these ratings agencies? Because for such a downgrade to happen it means that either the ratings agency did not do their homework or worse, were complacent in the deceit. It is as though certain banks in the US, knowing that the US government would never let them sink, deceived their investors by waving the ratings flag for junk products such as CDOs when they knew that this was junk. They knew this because they created them from junk. Yet the ratings agencies who were privy to this knowledge still rated it far better than they should have because they were afraid that if they did not play ball, they would lose out on the money that would flow towards them.

Now the latest game is that of the downgrading of countries. Greece, Italy, Ireland, Spain and Portugal are the latest victims of this ratings racket. These ratings agencies knew that these countries had borrowed more than they could pay yet until late 2008 no one heard anything negative about this. Now, to help the banks take over the assets of these countries, they have downgraded or threaten to to ensure that these governments apply austerity laws on their populations. The winners? The banks that underwrote these bonds. Simply put, these banks are getting their governments to chip in plus the defaulting government to cover their actions and line the pockets of those who lent to them. This will be done through tax payers in both the countries of the lending and borrowing governments. And who facilitated this all? Ratings agencies. Because without the ratings agency’s thumbs up, the borrowing governments would never had been able to borrow in the first place. The ratings agencies were also the rubber stamp that allowed the lending banks to go to their governments for a bail out by saying when they invested; these borrowers were strong as proven by what the ratings agencies said so.

The game is rigged. Learn to play it or avoid it. Not even countries are immune to the trickery some will play at.