Moody's cuts Greek rating

Moody's has cut the rating of Greek debt to Ca from Caa1 - pretty much on the edge of default.
The EU debt swap deal essentially means that private sector creditors would lose somewhere in the region of 20% of their current value.

I am sure many would find fault with the ratings agencies for their actions now and refer to their triple A ratings of CDO toxic garbage that precipitated the initial credit crunch. However I think this is the correct course of action - we can't blame the ratings agencies for being too lax on the one hand with ratings and then also find fault when they are too harsh.

There should be reform to the whole ratings model but that is more to do with how the agencies make money and who pays the - essentially thats a discussion about the incentives that drive them and what the best model might be. I will dedicate a whole post to that topic soon.