21 June 2010

Fools Gold

A triple A or AAA rating confirms a low likelihood of defaults a kind of blue ribbon seal or blue chip debt….at least that’s the idea. But the agencies who provide these ratings were really caught out by Sub-prime. Some highly polished turds were mistaken for gold by the people whose job it is to know better. One outcome of sub-prime is that although it was an outrageously costly lesson-at least it was a lesson learned and we do now know better, Don’t we?
There won’t be any Frobisher cycles will there? For those who don’t know, this is the story of Martin Frobisher. It is a simple message being that some people never learn: The endearingly hopeless Martin Frobisher Explored the Arctic region of Canada, found what he thought was gold and carried 1500 tons of it home on a dangerously overloaded boat only to be informed it was worthless iron pyrite. Undaunted, Frobisher returned to Canada, found another source of gold, carted 1300 tons of it back and was informed, no doubt with a certain weariness on the part of the royal assayer, that it was the same stuff. After that, we hear no more of Martin Frobisher.