Change We Can Believe In

Finding the right words and bringing it all together in a kind of unified field theory, that upon being read, everyone understands the gravity of what I have been writing about these many months, and those words spread across the Internet and country like a well crafted video or song, is beyond my abilities. While that kind of talent I wish I had, I do not, and my subject matter, in my opinion, does not belong in a video to amuse or a song to be sung in the shower. The subject of credit and how it is rated, and who does the rating, is like a golden thread that is woven through every square inch of the fabric of our domestic and world economy.

Last night, I was working as a gallery attendant at the Contemporary Arts Center and I had a very enjoyable conversation with a couple from Dusseldorf, Germany. He was a retired chemist with a Ph.D. and she was a retired school teacher. They are in their 70’s and visiting the United States as they have traveled to many parts of the world. Naturally, we talked a little about the economy in Germany and the U.S. He told me that the laws were changed in Germany too, and that several banks had gotten themselves in trouble investing in hedge funds. Those that did not invest in hedge funds, he said, were not in trouble. I brought up the issue of the credit rating agencies and bent his ear a bit with my story that the CRAs should be shut down and that the responsibility for credit ratings should reside with the Federal Reserve Bank. To my surprise, he said, that the German Central Bank, their Fed, is thinking about doing just that. Why should I be surprised that the Germans would recognize this blatant conflict of interest that lies between the investment bankers as underwriters and the CRAs, which they pay a fee for the rating? I told the retired chemist that I hoped that their Prime Minister, Merkel, would tell President Obama that this change is the right way to go. That this change is the kind of change we can believe in.

The issue of credit ratings from short term paper, like commercial paper, to 30 year bonds, touches everyone of us. There is not a thing we use in our daily lives that is not touched by credit ratings and the cost that that credit eventually falls on us, the individual consumer. From the food we buy at the grocery store, to the car we drive to work, to the credit card we use to fill the tank of our car, to the medical bills we pay for our children’s dental and health care, credit and credit ratings is an expense that plays a role for all of us.

One of these days, I will hit the right combination of words and images, and perhaps then my effort will not be for naught.

Stay tuned.