Roubini: Ratings agencies are no longer fit for purpose

Global economist Nouriel Roubini argues that rating agencies are no longer fit for purpose as they are 'backward looking' and have managed to escape any real scrutiny following the financial crisis.

Credit ratings are no longer fit for purpose. Since the beginning of the US subprime crisis investors have been worried that credit ratings fail to adequately and effectively measure risk. In practice, analysts at credit rating agencies follow developments in their country and then, if they think that a ratings change might be necessary, travel to the country to review the situation in more detail. Gosling's Grouse: Know your ratings This process means that ratings are often backward looking, downgrades occur too late, and countries are typically rerated based on when analysts visit, ...