Buffett defended the rating agencies and faith in Dow Jones Industrial Average

Warren Buffett defended the American standards

In brief: Rating agencies are not evil. Warren Buffett believes that American standards should be protected. Dow Jones Industrial Average has received support from Buffett.

Dow Jones Industrial Average is preparing for another marathon growth. Dow Jones index will leverage the support of the Warren Buffett. Dow Jones Industrial rose by – +225.52 points yesterday. Warren Buffett, billionaire, for whose investments Wall Street followed with a religious faith, had to hard, when on Wednesday he appeared before the U.S. Congress and testified about the role of rating agencies in fueling the financial crisis.

“All Americans believed absolutely that housing prices sharply fall can not” – said Mr. Buffett, in response to the congressmen, a member of a commission to investigate the causes of the financial crisis, which demanded an explanation why the agency Moody’s downgraded during the crisis that began with the collapse of the housing U.S. market, the ratings 89% of complex bonds, which was awarded the highest grade AAA. Rating agencies have been criticized for creating conflicts of interest, as are fees from the banks, rating is appreciated. During the financial crisis, debt billions of dollars that Moody `s, Standard & Poor` s and Fitch assigned a rating of AAA, turned into bad loans.

Meanwhile, the company’s share of Buffett’s Berkshire Hathaway in the capital of Moody’s fell from 20% a year earlier to 13%. Shares Moody’s have fallen by 74% since February 2007, and Buffett said that he would sell more shares if he foresaw the downturn in the housing market. “All made mistakes, including me,” – said Buffett, whose loss to the crisis is estimated at billions of dollars. The collapse of Wall Street stripped of his title, the richest man in the world rating of Forbes, which he received up to 2007. “It was the biggest bubble that I’ve ever seen in my life. Very few people can see the bubble – such is the nature bubbles. Rising prices have become a drug that affects the ability of reasoning,” – said the billionaire. Rating agencies, recognizing their mistakes, note that the ratings assigned to them can not be regarded as a command to buy or not to buy those or other financial instruments, and is perceived as only one source of information for the market.

Ukrainian Globalist
2010-06-03 12:01, Economics.

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