Citi Debt Funds Probed by SEC

Every now and then I have to comment on something that is just so incredibly ridiculous and completely destroys my faith in multiple tenants of finance, economics, statistics, rich people and life in general.  In this case it is Citi Debts Probed by the SEC.

There is a new article in the Wall Street Journal which can be seen here Citi Debt Funds Probed by SEC.  The gist of the article is that people invested in a leveraged fund that invested in municipal bonds and MBS.

This is the statement that shocked me:

"Standard & Poor's Corp. gave the Falcon funds a rating of "low to moderate sensitivity to changing market conditions," equivalent to safe, medium-term government bonds, a rating that sales materials highlighted. S&P declined to comment.".

Shattered Faith:

1) Finance/Economics - In no way shape or form does any municipal bond or MBS have the same risk profile as a U.S. Treasury bill....unless it is guaranteed by the U.S....like a lot of stuff right now - but not the Falcon issue.
2) Statistics - Once again I'm sure volatility was used to make similar risk projections, once again Wall Street manages to use a historical measure to predict future risk to a precise point.  Don't even get me started on VAR (Value at Risk)...

and

3) Rich People - I keep thinking they're smart, but they frequently are not, many are just gamblers on a good run.

Ahh life is interesting....Citi Debt Funds Probed by SEC, no it isn't personal finance but it is good to think about these items.