Tuesday, May 03, 2011

Interesting promotional release...

...for this cannot be taken seriously. Always be wary of those using "statistical" measures, for there are many, many ways to do so, most of which are useless and have no predictive power. For example, this firm states they use "statistical measures" which do not take into account qualitative factors. I submit, however, that the two problems quickly conflate. Using "official" statistics from countries creates political risk at the inception of the analysis. To maintain that a myopic account of official statistics from a politically volatile jurisdiction is illusory, the statistics themselves are political mechanisms, and it is no wonder that China and Thailand move to the head of the class in the short term.

Let's see how those "A" (highest in this particular firm's scale) ratings on Thailand peform over 1/3/5/10 years from now.

But you already know the answer to that.

From CNBC:

Weiss was quick to add that while the rating seems weak, the debt
situation is not in a danger zone that would trigger panic, noting
that there was still broad market acceptance for Treasurys.

The grade reflects the U.S. massive debt burden, low international
reserves and the volatility in the American economy, he said.

The U.S. government debt is fast approaching the $14.3 trillion
ceiling, with the debt-to-GDP ratio close to 100 percent. And a
downgrade of U.S. Treasurys - one of the most widely held assets -
could theoretically raise borrowing costs and in a worst case
scenario, trigger a default on the government's debt obligations.

America's rating was ranked 33rd out of 47 nations, according to
Weiss, which began tracking sovereign debt last year. France and Japan
also got a "C" rating, while Only China and Thailand received an "A"

Weiss Ratings based its score purely on statistics, and does not take
into account qualitative factors such as political stability.

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