King: Focus On Yields Not Credit Ratings

Only loan sharks focus on yields and do not focus on credit ratings. Why would investors listen to Mervyn King and give their money to governments or corporations with poor ratings (unless of course the interest rates are in the triple digits figures - loan sharks ask for interest rates in the 4 digits figures). Most of the public are not fools and can make up their mind who to lend to and at what rates. Sorry Mervyn.

While giving evidence to the Treasury Select Committee, Sir Mervyn King said changes in bond yields, and the spread between the debt costs of countries was a far better indicator of the economic climate.

Reference the above extract to the article:
Bond yields in the developed world are known to be artificially manipulated by the central banks of the USA,the EU and the UK.Who in their right minds pays attention to information of that nature?.At least the ratings agencies prepare an objective case to underpin their actions.The politicians and the other self interested parties presently criticising the ratings agencies do so because the reasoned argument approach does not result in that which they want the public to believe.

Why is it that banks operations are to be "ring fenced" rather than being split into the "casino banking" component and the retail banking component as separately identifiable companies?. It seems to me that going half way,as is the plan,not immediately of course but years into the future,is hardly a proactive approach to resolving the problem that caused the present economic crisis.The fact that banks were authorised to gamble with money that they did not own has affected the economies of the whole world.Governments should enact laws that ENSURE that,in the absence of illegal banking operations,this cannot possibly happen again!.

sky news /yahoo pls, stop employing simpletons. the credit rating agencies were giving AAA ratings to worthless credit derivatives, thus more than aiding the financial meltdown in 08. these are the mistakes of the past that mervyn king aluded to. google it ffs, the story is nt that hard to find.

John Cardif. The derivatives onlt became known as worthless after information which was being witheld from the markets became known or do you think that people deliberately invested in worthless junk. The credit rating agaencies were working on what was known not what was hidden from the markets. It still does not take away from the fact that to say people should rely on bond yields which everyone knows are manipulated by central banks buying and selling or making cheap money avaiable as a measure of success is ridiculous. A bit like ignoring someones credit rating when they apply for a loan.

david - you re making my point. the ratings agencies were giving a AAA rating without knowing what the products (sub prime mortgages) were. how can you rate somthing you know nothing about? - thats the "mistakes" that mervyn king mentioned.

Ah! OK. We are to replace one arbitrary, meaningless system of the measurement of the “value“ of an economy devised by a group of nebulous, unimpeachable, self-appointed, self-serving non-entities with a monopoly on the means of public discourse and who claim to have been bestowed with unverifiable special powers of insight not available to the rest of us mere mortals (Credit Ratings Agencies and Credit Ratings) with another arbitrary, meaningless system of the measurement of the “value“ of an economy devised by a group of nebulous, unimpeachable, self-appointed, self-serving non-entities with a monopoly on the means of public discourse and who claim to have been bestowed with unverifiable special powers of insight not available to the rest of us mere mortals (Investment Bankers and Bond Yields).
These people have deluded themselves into thinking that the world is still peopled by powerless, clueless, helpless, hopeless peasants who, in ages past, had no choice but to accept what their rulings elites said and did. The fact that even small children know that we live in a 24-hour media, digitally-connected, near-instant communication, global satellite network-linked world today, with shifting centres of economic power, powerful and seemingly indecipherable global economic and ecological forces at play and the consequent myriad related uncertainties thereby generated, revealing nobody to be much in control of anything, seems to have completely passed our ruling elites by.
Even naked, barefoot, bone-through-the nose, Amazonian jungle dwellers can tell, within minutes, whenever their politicians, economists and journalists have lied to them, if some adventurous and enterprising young person in the village has managed to smuggle in a radio, a mobile phone or a pay-as-you-go, internet-enabled computer.
The only “economics” that matters to us ordinary folk is the stark reality of the interplay between the unending battle to earn a decent, sustainable living and the predatory state and corporate ‘wolves at the door’ ranged against individuals and families with a mission to dispossess them of their hard-earned income by fair means or foul.
If our financial, political and journalistic elites insist on continuing to delude themselves that the gambling (with impunity) in a global casino, risking only other people’s hard-earned money that constitutes almost the entirety of the Financial Services Sector, is real “work”, that is genuinely “socially useful”, then let them go ahead and enjoy their fantasies. When the whole deck of cards tumbles around them, as it surely will, the more polite amongst us will try very hard not to say: “I told you so”.

That is correct

The is very correct

From someone on how many £1000s a year and a gold plated pension at the end and even a Peerage. yah boo sucks!

An interesting point but would only work if all purchases were transparent. How can you judge a bond auction when you dont know if it is a central bank buying to prop up the auction or even a central bank buying using cheap money it has given to investors. In an ideal world King may be right, unfortunately we do not have an ideal world.

Look Merv old bean stop with the Q.E'ing, stop the stream of worthless money flooding the system......devaluing what little money we have in our pockets .....oh and while your at it Merv old boy stop feeding the UK Ponzi Scheme ....history will be your judge and Ben Bernanke's too..

the credit rating agencys are casting an impartial eye on the situation, having been embarrased by their past failings, you can guarantee that when the EU CONCORDIA hits the rocks they will be stood on dry land asking the politicians why they have abandoned ship .