Let's Face It: S&P's Analysis Is A Joke... But It Still Has A Right To An Opinion

from the you-probably-just-shouldn't-believe-it dept

There's been a lot of attention paid to S&P over the past couple weeks, after it was the first of the big three credit rating agencies to "downgrade" US debt. As we pointed out at the time, it's pretty ridiculous to get worked up over the downgrade, because it's just one company's opinion. And, yes, for very ridiculous reasons, the opinions of a few ratings firms are written into the law, and some debt holders are required to hold certain types of debt based solely on the opinions of these companies. The real problem is that such opinions matter. In fact, as many commentators noticed, after the S&P downgrade, people actually rushed to buy up more US debt, driving down the cost, which is the exact opposite of what you would think should happen.

Of course, S&P has other problems. Nate Silver did a brilliant (as per usual) takedown of "Substandard and Pourous," in which he noted that S&P's ratings are pretty dreadful. He goes through the data and shows that listening to S&P will make you poorer. Basically, lots of other information will give you a much better indicator of the likelihood of default on sovereign debt. The specific problem?

S.&P. ratings tend to lag, rather than lead, the market. That is, in cases where the market’s view of default risk is misaligned with S.&P.’s, S.&P. is a good bet to change their rating to catch up to market perception.

And, of course, lots of people have pointed out how poorly S&P did in the housing bubble, rating crap bundles of mortgages as investment grade when it was clearly junk. Then there's other general sleaziness. Pro Publica points out that S&P -- who, it should be mentioned, apparently made a $2 trillion "error" right before downgrading the US debt, is apparently lobbying against a regulation that would require it to report "significant errors."

But does this, as some have suggested, mean that S&P should get into some sort of legal trouble? Michael Moore even made the ridiculous suggestion that the company's CEO should be arrested. Really? You would think that Moore, who has been pretty damn critical of US government policy over the years, would think twice before thinking that someone should be "arrested" for stating an opinion that was critical of the government's ability to repay its debts.

But, of course, we still have some of the First Amendment, and that means you can state an opinion -- even one that turns out to be wrong or useless -- and not be arrested for it. Once again, the real issue is this idea that we need a ratings agency to determine the quality of debt. In the equity world, plenty of investment banks issue "ratings" on the equity (usually some form of "buy, sell, hold") but no one takes them quite as seriously as the debt ratings from S&P, Moody's and Fitch. Again, I'd argue that this is because of the requirements in law about the kinds of debt certain operations can hold, and tying that to just a few opinions. If we had the same rules for equity, we'd see a very different stock market today. Sure, when a big bank downgrades a stock, people sell, but people implicitly recognize it's an opinion. When it comes to debt, something about the ratings system and the requirements about it makes people think that the ratings are more "fact" than opinion.

So, let's get away from that entirely. Let's dump the requirements that any debt holdings should be required of certain levels based solely on the opinions of these ratings agencies with terrible track records. Instead, what's wrong with just letting the market price decide how trustworthy the debt is? You don't have to do away with ratings entirely. Anyone can have an opinion. But without the requirements that make just a few firms integral to the market, you could have a lot more open competition on who really has the best opinion on the viability of certain debt.

So don't arrest the head of S&P. But, stop giving the ratings from these few firms special status that makes people think they're something more than just a random company's opinion.

Filed Under: debt, markets, michael moore, opinion, ratings
Companies: s&p

Anti-SLAPP Law Used To Protect Michael Moore's Use Of Video Clip

from the slapp-back dept

We've been covering various stories about anti-SLAPP laws -- the important set of (state) laws that protect people who are sued not for any significant legal reasons, but in order to silence them -- and there's been a first ruling on Washington State's anti-SLAPP law, which is a bit different than the typical anti-SLAPP ruling. Thomas O'Toole points us to the news that filmmaker Michael Moore has prevailed over a privacy rights claim that was brought against him. Whatever you think of Moore as a fillmmaker (and, seriously, please don't turn the comments into a pro/con fight over Moore), this case is pretty interesting.

It involved a clip that Moore used in his film Sicko, that was sent to him by the subject of the video, but not by the guy who filmed it:

At issue was a snippet of video taken from several hours of tape Aronson shot while touring England with a friend, Eric Turnbow, in 1997. It showed Turnbow attempting to walk on his hands across Abbey Road and falling, injuring himself. It also contained a brief snatch of a song Aronson composed and sang. According to court filings, Aronson's voice and photograph appear in 16 seconds of the tape.

Turnbow, a fan of Michael Moore's, sent tape to the filmmaker in 2006. Moore was soliciting stories about health care outside the U.S. Turnbow's shoulder injury was treated in a British hospital, and Moore used it to compare the health-care systems in the two countries. However, Turnbow did not have Aronson's permission to send the tape, and Aronson never signed a waiver, although Turnbow did, according to the pleadings.

Aronson then sued, saying it was a violation of his rights, but the court tossed it out and ordered that Aronson pay Moore for filing a SLAPP lawsuit. Aronson's lawyer, not surprisingly, was not at all happy with the ruling:

"This wasn't a strategic lawsuit," he said. "This is a good man who had his videotape used without his permission."

It's definitely true that this does seem to be a rather broad interpretation of a SLAPP, but on the whole, such anti-SLAPP results are a good thing for free speech. Threatening or suing people for making a statement of any kind is problematic if you believe in free speech rights. It will be worth watching to see if there's an appeal in this case, as it could really bring out some questions about the limits on anti-SLAPP rulings (at least in Washington... but it could impact laws elsewhere).

Filed Under: anti-slapp, michael moore, privacy rights

Michael Moore Admits He Doesn't Care About International Downloads, But He Has To Pretend To

from the download-away dept

We were a bit surprised recently when the news came out that lawyers representing Michael Moore were making the rounds concerning international downloads of his latest documentary, Slacker Uprising. Moore had decided to give the movie away free online, and given his past statements about having no problem with folks sharing a movie online, it seemed out of place to complain about any sharing that didn't just happen in the US and Canada.

Now it appears that Moore himself has taken the initiative to explain, and the answer is effectively that he doesn't care -- but he has to pretend to, because he only holds the rights for the US and Canada. In a note to the site TorrentFreak, he wrote:

"What do you think I'm up to? I know it may not be obvious to most, but I think you guys get it. I only own the US and Canadian rights. So my hands are tied. But this is the 21st century. What are 'geographical rights'?"

He then went on to point to the silliness of trying to prevent fans from sharing a movie:

"I'll say it for the hundredth time: If I buy a book and read it, and then give you the book to read, I have broken no laws. Why is that not true for all media?"

I'm not always a fan of his movies (though I do find them entertaining), but it's nice to see another moviemaker recognizing how counterproductive it is to try to stop file sharing, when embracing it has many more benefits.

Filed Under: bittorrent, borders, distribution, free, jurisdiction, michael moore, movies

Michael Moore's Lawyers Think They Can Limit BitTorrent To Just US And Canada

from the the-internet-doesn't-have-borders dept

It's always amusing when people seem to think that geographic borders actually apply to the internet. We recently wrote about Michael Moore's plan to freely distribute his latest movie online, which supported Moore's earlier statements saying the greater the number of people who see his movies (for free or not), the better off he is. However, when the movie was finally released online, and users were told to share it, some were reasonably surprised that Moore said it should only be shared in the US and Canada. Of course, once people are distributing it online, national borders are somewhat meaningless. And it seems next to impossible to figure out a way to ask people to share the movie, distributing it via torrent sites... but say that it should only be shared within the US and Canada.

However, it appears that Michael Moore's lawyers are now trying to do the impossible. Michael Geist points us to a website that received a DMCA takedown notice for sharing the movie outside the US and Canada. In fact, the lawyers were confused, and the website they sent the takedown to was merely a DNS service, not the webhost, but it appears the lawyers will continue the rather ridiculous task of trying to take down any torrents of the movie outside the US or Canada.

Filed Under: bittorrent, borders, distribution, free, jurisdiction, michael moore, movies

Michael Moore Embraces Free Distribution Of Latest Movie

from the and-another-one dept

No matter what you think of controversial film maker Michael Moore (and I'll admit that I'm not a fan -- I think he's entertaining, but plays way too loose with the facts, even on issues where I might agree with him), over the years this been this odd compulsion by pro-copyright folks to pigeonhole Moore as being against anyone sharing his films online -- despite the fact he's clearly stated he has no problem with people file sharing his movies if it means more people see them. Yet, as we've pointed out, others have claimed that Moore's worst "nightmare" came true when one of his movies was leaked online, despite the fact that the leak helped get it more attention (just as Moore wanted) making the movie quite profitable. Then there was the "legal group" that used one of Moore's films as an example of filmmakers hurt by file sharing -- again ignoring Moore's stated appreciation of fans sharing his movies.

Well, now he's making his stance even clearer. He's releasing his latest movie for free online, though, oddly it will only be officially available that way for three weeks (though, I'm sure by then it will be widely available in unauthorized forms as well). As of right now, it's a little unclear if the movie will be available for actual download or just streaming, though the website for the movie itself, called Slacker Uprising says that it will be a download. I think he's being a bit disingenuous in claiming that he's not planning to profit from the release, as he's also offering a DVD for sale, which will likely do quite well. Either way, perhaps now folks will stop using the leaks of his movies as evidence that he's against free distribution of his movies.

Filed Under: distribution, free, michael moore, movies