Somebody made huge money on S&P downgrade of US
The Standard and Poor’s rating agency is facing an inquiry after it stripped the US of its top AAA rating last week.At the time S&P received a furious response from the US Treasury, which accused the agency of making a $2-trillion mistake.As The Market Ticker financial analyst Karl Denninger says, this is just the start of a full-scale probe into the activities of credit rating agencies and that the path does not necessarily begin or end with S&P. “My guess is that the investigation is going to find – if it is not just an arm-waving show – that there was an external party having nothing to do with the S&P that made a great deal of money on Friday [August 5],” the analyst shared.“There is clearly a political element to this. If you know that downgrade is coming and you shut the market prior to that, you can make a great deal of money. There is a serious concern that there are leaks within the system,” Denninger observed.The good question now is why this insider trading been investigated in a general sense, said the analyst, recalling Lehman Brothers and some of its counterparts that were technically bankrupt, but continued functioning despite that fact for some time before going under for real.