Why Does Standard and Poor's Still Exist?

So S&P finally busted out the red pen today, downgrading 9 eurozone countries. You may ask (and it's a good question), who gives a fuck? And the answer, I think, is nobody.

I mean, I realize ratings agencies are somewhat inextricably intertwined in the fabric of our financial system; I think there are still some funds that are required to purchase triple A paper, like money market accounts. But the reality is that the ratings agencies are so far behind everyone else, that issuing a rating is like looking around on a cloudy day and proclaiming that we have an increased chance of rain. In other words, everyone who knows more about the bond markets than S&P (which is every trading desk in the world) has already taken their position. You didn't need to be Nostradamus a month ago to see that Italy and Spain looked really fucked up.

And remember the last time S&P downgraded a major country? Let's look at how the bond market reacted:

Well shit. Ten year US Treasury yields actually DROPPED (the downgrade was August 5) - under 2%! So basically nobody gives two craps what S&P says. And why should we? If the subprime mortgage crisis taught us anything, it's that we shouldn't assume that the agencies can competently assess risk.