August 14, 2007 (LPAC)--The trustworthiness of Wall Street ratings services, which play a central function in the monetary manipulation game that lies behind the stock market, has come into question as a result of the recent, sudden collapse of market heavyweights like Bear Stearns' and Goldman Sachs' hedge funds.

Specifically under fire are Moody's Investors Service and Standard & Poors, which until now had been considered pillars of reliability. Like accounting firm Arthur Anderson in the wake of the Enron collapse, confidence in these firms is now shaken to the point that they may not recover.

At issue are the complex securities, created by firms to expand the pyramid scheme which was built on the marketing of mortgages in the US. These are securities, which are marketed by one Wall Street firm and sold to another, have exotic sounding names like "collateralized debt obligations" (CDOs), and "constant proportion debt obligations" (CPDOs). They were rated as top grade paper by the ratings services-- the problem is, their value was based on financial and not physical criteria. When the physical side of the housing expansion reached the limits of the wallets of the people paying the mortgages, this scheme was quickly exposed, as bankers started to get a long overdue lesson in physical economics.

"The rating doesn't tell me anything," said one analyst quoted by Bloomberg.com. Many of these securities, which were rated AAA, or as dependable as U.S. Treasury bonds, were overnight reclassified at the level of junk bonds, worth as little as fifty cents on the dollar. Wall Street is now punishing Moody's and S&P by the rules of the game: their share prices have dropped 28% and 24%, respectively. When the collapse intensifies, however, these firms might just find that, although they managed to weather the Great Depression, that might not be enough.