Credit-rating agency Moody’s downgraded Berkshire Hathaway two notches, said Andrew Ross Sorkin in The New York Times, spoiling its perfect Aaa rating and “tarnishing the luster” of Warren Buffett’s chief investment vehicle. Berkshire for years held a “rarefied status” among U.S. firms, due to Buffett’s legendary “investing prowess,” but even the best companies are hit in a recession like this. “In an interesting twist, Berkshire owns 20 percent of Moody’s.”
That’s why the downgrade is “the PR move of the decade,” said Peter Cohan in BloggingStocks. It gives a patina of independence and objectivity to a rating agency that, with its brethren Standard & Poor’s and Fitch, “gorged on fees from investment banks” to over-rate their “toxic waste.” Moody’s would have more credibility if it had "downgraded Berkshire before Berkshire’s shares lost 44 percent of their value.”
“Moody’s appears to be a bit late to the party,” said Ravi Nagarajan in Guru Focus. Fitch beat them to Berkshire a month ago, albeit with a less “harsh” downgrade. On its merits, though, Moody’s downgrade appears to be based on “dubious logic.” Rather than assessing the risk of a default, the tarnished rating agencies seem to be “desperately” trying to assert their own relevance.
THE WEEK'S AUDIOPHILE PODCASTS: LISTEN SMARTER
- The 11 worst fast food restaurants in America
- 7 things the world's happiest people do every day
- 7 grammar rules you really should pay attention to
- 5 tricks to making a mind-blowing burger
- What would a U.S.-Russia war look like?
- Why America is duty bound to help Iraqi Christians
- What if The Purge was real?
- Why are so many parents being arrested?
- 9 things you probably didn't know about the moon
- Israel has only two choices: Eliminate the Palestinians or make peace
Subscribe to the Week