Risk rating agencies are overrated

One of the international risk agencies downgraded France and other European countries from AAA to AA+, which means that according to this agency those countries are a little less reliable if you buy bonds or lend money to them.

I don’t really want to write about this particular decision, I just want to point out that these are the same rating “experts” that assessed the risk of “sophisticated” financial instruments containing subprime mortgages, giving them AAA rating (means the least possible risk). These instruments led to the latest economical crisis of 2008.

From an article in the Financial Times written by Philip Stephens (“Downgrade the Rating Agencies”, Friday January 20 2012) I think a good point made is that rating agencies credibility and ability to accurately assess risk is not very high, thus they should not be taken too seriously - particularly by decision makers in different countries.

I think that these ratings should be taken just as reference and not as guidelines to define long term financial policies.