Standards are poor: On competence and professional integrity at the leading rating agency

Competence behind sovereign ratings is crucial, given that the government bond market may be vulnerable to multiple equilibria and self-fulfilling prophecies. With this in mind, this paper reviews and scrutinises official Standard & Poor's publications that address key issues surrounding the government bond market and the role of ratings. It presents a lack of competence, revealed in an inadequate grasp of crucial concepts such as multiple equilibria and self-fulfilling prophecy, obliviousness to Standard and Poor's own rating methodology, and a nonchalant treatment of facts that casts a poor light on the agency's integrity.