Author Topic: Fitch Takes Away Berkshire's AAA Rating!  (Read 7212 times)

arbitragr

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Re: Fitch Takes Away Berkshire's AAA Rating!
« Reply #20 on: March 13, 2009, 02:08:52 AM »
Look for the silver lining. We will know the bottom has been reached when Moody's and S&P also downgrade BRK. ;D

... Moody's wouldn't do it ...  ;)
"worry top down, invest bottom up ..."


StubbleJumper

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Re: Fitch Takes Away Berkshire's AAA Rating!
« Reply #21 on: March 13, 2009, 03:29:51 AM »
WEB should take a page out of Prem's book, and simply ask Fitch to stop rating Berkshire.  There is no substitute for integrity, and it sometimes appears to be lacking at Fitch.

Maybe next we'll see an article from some two-bit analyst proclaiming that BRK is truly $80b under-reserved?

History doesn't repeat, but it does rhyme!

SJ

arbitragr

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Re: Fitch Takes Away Berkshire's AAA Rating!
« Reply #22 on: March 13, 2009, 04:54:24 AM »
WEB should take a page out of Prem's book, and simply ask Fitch to stop rating Berkshire.  There is no substitute for integrity, and it sometimes appears to be lacking at Fitch.

Maybe next we'll see an article from some two-bit analyst proclaiming that BRK is truly $80b under-reserved?

History doesn't repeat, but it does rhyme!

SJ

... truth be told ... Fitch probably has had more integrity than Moody's and S&P throughout this crisis ...
"worry top down, invest bottom up ..."

SharperDingaan

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Re: Fitch Takes Away Berkshire's AAA Rating!
« Reply #23 on: March 13, 2009, 05:50:19 AM »

Keep in mind that Fitch is in a lose/lose proposition, & needs to minimize damage.

They are not seen as credible as if you have to have a rating you go to Moodys or S&P, or you don't sell/roll the bond. A Fitch rating is an admission that you're desperate, & couldn't get what you wanted - & therefore of minimal use.

Realistically it is hard to see how anyone other than a sovereign could have a AAA rating.
The rating can also only set the base credit rate in that country, and a AAA rating across sovereigns is not comparable. ie: A US Fed AAA rating is clearly not the same as Chilean Central Bank AAA rating, yet they are both sovereigns, & they are both the best credit quality in each of their countries. The best public rating should really be no more than AA+

The best Fitch can do is come up with a new rating system,
& take some hits along the way to re-establish credibility in how they get there.

SD



 

     

woodstove

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Re: Fitch Takes Away Berkshire's AAA Rating!
« Reply #24 on: March 13, 2009, 07:42:04 AM »
Probably should structure a company so it is robust enough to survive with BBB rating.  Else don't deserve A or higher.

Rating change should be non-event operationally to Berkshire, or there is something wrong with design of the enterprise.

Sure a bit higher cost on some borrowings, but nothing worse than decline in economic activity.

An aside ... Russel Metals is saying they are seeing 40 pct decline in demand for steel products.
That is worse than the 30 pct decline I had previously heard quoted for steel consumption.

So the context reallly does matter.  Nothing is AAA in current environment.

Not to worry.  Berkshire is among the best, maybe the best of class where it is participant.

Stove

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Re: Fitch Takes Away Berkshire's AAA Rating!
« Reply #25 on: March 13, 2009, 10:52:37 AM »
Woodstove - excellent name if I do say so.

I don't see why the US Gov shouldn't have a AAA rating, as long as it can create the means to pay back its debts out of thin air.  Can I borrow someone's wheelbarrow to carry all of my dollars?

bookie71

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Re: Fitch Takes Away Berkshire's AAA Rating!
« Reply #26 on: March 13, 2009, 11:10:01 AM »
If Berkshire is downgraded, what is the "true" rating for the USA and all the debt we (and our kids, grand kids, and great grand kids) have taken on.  When the foreign investors decide that they don't want these debt instruments, we will get the "most unfair" tax of all = inflation.
IMHO
Always remember, Pigs get fat and hogs get slaughtered.

pohick

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Re: Fitch Takes Away Berkshire's AAA Rating!
« Reply #27 on: March 13, 2009, 12:22:49 PM »
the last shred of credibility gone.

(note GE rallied on the same downgrade by all)

i think you could make a lot of money analyzing bonds, and arbitraging the nonsense ratings.
(i.e buy BBB that are better than AA) hold for convergence
(just don't borrow like LTCM)

WEB should be having a field day

Hoodlum

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Re: Fitch Takes Away Berkshire's AAA Rating!
« Reply #28 on: March 13, 2009, 02:17:29 PM »
The markets are comparing BRK to Turkey, Peru and Colombia.

Berkshire credit costs trade like Turkey's