While within each category the rating agencies methodology is probably valid, where it all went wrong was in their basic assumption that plain vanilla debt (Chalk) is in fact equivalent in risk terms to structured note (Cheese) - and some of it is pretty cheesy...
But it all made work for the ("For Profit") ratings agencies to do.... "Any economic unit can emit money. The serious problem is to get it accepted" Hyman Minsky
If anything, in my sector (wind power), agency ratings were always more severe than we thought the underlying risk was... In the long run, we're all dead. John Maynard Keynes
