Stacy Summary: Standard and Poor’s is on all out assault mode against European sovereign debt this week. Floor by floor by floor. It’s just downgraded Spain. No doubt the turmoil following on these downgrades is conveniently distracting from their central role in the CDO frauds that are presently being investigated inside the US . . . Gold soars, euro tumbles on Spain downgrade
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First to say
Stacy is hot
S&P SHOULD BE IN JAIL!!!!!!!!
Can’t wait till its Blighty’s turn !
Mike
Be interesting to see what happens when they downgrade the UK followed by the US
Wow! Who is next? Ireland?
Max is right: these people are all so much more dangerous than Osama bin laden could ever hope to be.
I’m wondering at the point why the debate on fraud is so limited.
I’m seeing the formation of risk cartels on Wall St through credit default swaps, but there is absolutely no debate about it. In fact, it all seems to be hearsay on he said she said. Why would government debt require credit default swaps in the first place, for example?
My question would be how they’re doing an end run around anti-trust violations with nobody noticing.
Are S&P, Moody’s or Fitch quasi-governmental organisations are what? Who exactly are they? We already know they’ve colluded with banks and governments to give junk a triple A rating. Why should we believe them now when they downgrade a country?
I’ve this feeling in me bones that the US/UK won’t be downgraded.
. The ratings agency which has been ranked as one of the main culprits of the credit crisis routinely labeling subprime debt issues to much higher grades is seemingly on a mission to exonerate itself by zealously downgrading countries in the last 2 days.
Fitch began the fiasco, Danny:
http://www.istockanalyst.com/article/viewarticle/articleid/4022074
The basel 3 requirements concerning covered bonds are the root of the pig’s snuffling.
http://ftalphaville.ft.com/blog/2010/02/05/142651/next-up-for-europe-covered-bond-catastrophe/
http://ftalphaville.ft.com/blog/2010/01/21/131356/covered-bond-consequences-for-sp/
It seems so familiar for some reason…the lies…the press…basel regulations…liquidity squeeze….like deja vu.
Can anyone provide a link to the family tree of who the rating agencies are? I would like to try and develop a visualisation of these institutions. They need to be brought out of the shadows. Faces. Names. Other interests.
Chris: It should happen – but will it. Mike/Liverpool has been waiting for two years – patience or what!
Here’s a more appropriate action: declare war on Goldman Sachs and other global financial firms that created this mess. Send the troops, the planes, the tanks, and the ships. Attack every outpost of the saboteurs on European soil. Blockade the airports and ports. Make Wall Street traders and CEOs fear for their lives, or at least for their freedom to travel. Build some Guantanamo-like facility to hold these enemy financial combatants until they can be tried, convicted, and properly punished.
@ Danny – Spain sounds no worse to me than the US in the following WSJ piece on the Spanish downgrade:
http://online.wsj.com/article/SB10001424052748704423504575212104219854716.html?mod=WSJ_hpp_MIDDLETopStories
IMO, we won’t be downgraded until all other countries have taken their hit and the Federal Reserve is ready to implement austerity measures here by attacking “entitlements”: social security & Medicare, and by instituting a new national tax that will squeeze everyone but the wealthy.
Interesting read from True/Slant; The case for nationalizing S&P and Moody’s
The banks need to stand up to Draghi and the Basel Commission (FSB) or the end of fractional reserve banking will be upon us: but isn’t that what most people on this blog desire?
Regulate the banks in order to destroy liquidity: the key is liquidity. FSB is operating for the monetary authorities who derive their sustenance from a different table with legs featuring the term sdr-multilateral exchange rate- system. They see all the future suffering as advantageous.
There will be blood. Poland was only the beginning.
Euro tumbles..Big surprise of course. Who would have guessed Spain was in trouble? So it is S&P + the people that want the S&P to mean something. S&P, the rigged game referee..
Lenihan now says he might have to close Anglo now (apparently on European pressure) after we pumpin’ 22billion into it. hahahahaha!!!
http://breakingnews.ie/ireland/lenihan-open-to-idea-of-anglo-wind-down-455703.html
Roubini: “In A Few Days Time, There Might Not Be A Eurozone
http://www.businessinsider.com/roubini-in-a-few-days-time-there-might-not-be-a-eurozone-for-us-to-discuss-2010-4
Correction: we haven’t pumped in that 22billion yet. Right, I’m going for a pint; we are all DOOMED!
My gold philharmonic looks very shiny today!
Talking about S & P. Another company that should be kicked out of Europe.
No Danny S & P should be executed. These folks are war criminals.
Controlled demolition like World Trade Center buildings. USA is a terrorist rogue state. USA is the enemy of Europe. They love to screw Europe.
Is there that a difference between USA, UK and Spain. I think not. Naturally it’s so much fun adding gazoline on the fire for these New-York terrorists.
———————————————————————————————————–
We consider the main factors dampening Spain’s medium-term growth prospects to be:
- Private sector indebtedness at 178% of GDP, which in our estimation is higher than that of many of Spain’s peers;
- An inflexible labor market (we expect unemployment to reach 21% in 2010), which we believe is likely to slow the recovery of external price competitiveness;
- A fairly low export capacity–currently, Spain’s exports are close to 25% of GDP–coupled with eroded competitiveness due to past high increases in unit labor costs compared with those of its peers;
- The financial system’s asset quality, which in our opinion is under pressure as reflected in the recent revision of our Banking Industry Country Risk Assessment (BICRA) for Spain to group 3 from group 2
“Covered bonds are backed by mortgages or public sector loans that remain on the issuing bank’s books giving investors the comfort of a claim on them in any default.
They are a low-cost funding option for many of Europe’s banks, but the sovereign crisis means some banks in southern Europe find it tougher and more expensive to sell them.
Worries over heavily-indebted Greece has hit the asset class, which is tied to the fortunes of government bonds.Spreads on covered bonds from banks in Spain and Portugal jumped wider this week as bearish investor sentiment on Greece spread into Europe’s so-called periphery.”
http://uk.reuters.com/article/idUKLDE63L1Q120100423
Covered bonds are tied to government bonds in that they represent financial stability: the attack on covered bonds precipitated the spread widening on government bonds, no?
“Marinos Yannopoulos, finance director of Alpha Bank, says: “Other banks can forget about raising rights issue funding for the next three months at least. Greece is the wrong zip code.”
Fitch has already put covered bonds issued by Greek lenders on negative watch. And with the economy set to shrink again next year by about 0.3 per cent, against a predicted 1.3 per cent this year, Greek households are increasingly cautious about borrowing.”
http://www.finfacts.ie/irishfinancenews/article_1018683.shtml
(December 16, 2009)
Marc: the Greek crisis was declared by the basel 3 regulations, not the American bankers. Are you clanging pots to defray interest in the real criminals?
Michel Chossudovsky | 011409 Public Lecture “The Global Financial Crisis”: (Global Financial Terrorism to quote a financial sage)
http://www.youtube.com/watch?v=qYcYaVs1-aM&feature=PlayList&p=4F88EDD45B39006D&playnext_from=PL&index=0&playnext=1
The US federal bonds should have a rating of DDD+
The US state bonds should have a rating of DDD
The US county and city bonds should have a rating of DDD-
Based on the [ {Cumulative Debt Per Person} / {Average Income} ] logistical payoff horizon.
Probably US bonds — at least some of them — should have ratings of
EEE
FFF
ZZZ
if the original ratings scale permitted it.
The current scale can be found at :
http://en.wikipedia.org/wiki/Bond_credit_rating
+
http://en.wikipedia.org/wiki/Credit_risk
@Danny
S %##*$$& P downgrade Ireland to JUNK. When will they downgrade S & P to a criminal organization like the mafia. It’s quite not funny at all seing this criminal firm still in existance.
The rating agencies are just actors in the NWO theater.
http://www.youtube.com/watch?v=NO24XmP1c5E&feature=player_embedded
It is a political carrot and stick in the hand of the International banking Cartel – MAFIA
The ratings agencies are owned by the US/UK syndicate. They are interested in keeping the game going by pointing the bond vigilantes at the other wounded animals. Even though they are the most vulnerable.
How long can this game continue? Fee fi fo fum, I smell the blood of the Englishman.
If you want to partly understand why Greece could and should never be considered part of Western Europe, you need to see this.
The explanation is aimed more at Central and Eastern Europe, but about 1/3 of the documentary is concerned with the Byzantine Empire and its offshoots…
http://blip.tv/file/3550163
Today there is widespread scepticism about the achievements of western civilisation. People doubt the value of its scientific and technological advances and point to their often equivocal side-effects. So far as political influence goes, western empires have vanished and western colonial powers have retreated. The confidence once felt in a world economic order created by Europeans has crumbled with that order itself. Yet western ideas and institutions still exert huge influence throughout the world. China’s one billion inhabitants are ruled according to the ideas of a nineteenth-century German, Karl Marx; and when African statesman assert principles of nationhood in the UN, they are speaking of an idea imported from the West. Paradoxically, perhaps the West has triumphed after all – even if not quite as its critics have noticed.
@ frances,
Glad you’re reading the FT, Alphaville do a fantastic job. [Pity I've been banned from commenting there.]
Their two stories indicate the reasoning offered for changing the ratings of covered bonds given by the agencies is:
1. “…because many issuer ratings are falling closer to key Timely Payment Indicator (TPI) thresholds.”
2. “Downgrades of sovereign ratings may negatively impact covered bonds directly, as refinancing risk in a market increases, or indirectly, to the extent the downgrade may lead to negative rating pressure on covered bond issuers.”
Basel III isn’t mentioned in either account of the agencies ratings.
The relevance of Basel III to covered bonds?
http://ftalphaville.ft.com/blog/2010/04/23/209721/the-covered-bond-industry-is-miffed-about-basel/
Alphaville’s comment is precisely the point; one they relate to Deutche Bank’s research:
http://ftalphaville.ft.com/blog/2010/02/12/148546/covered-bond-bailouts/
So the ratings agencies do have grounds for making this change. Perhaps similar grounds to the Basle Committee?
Liquidity is just fiat money and debt flowing around the financial system and usually emerging in the general economy as gross inflation of asset prices.
The banks generated the crisis with massive liquidity (with cheap money from central banks and credit/debt creation). The BIS warned of a potential credit crisis, the Basle reforms (while insufficient) do address many of the excesses of the international banks.
The banks do need to be regulated, and so does the level of ‘liquidity’ flowing through the financial system (esp. hedge funds & carry-traders) around the global economy. That’s one of the lessons that should have been learned in multiple financial crises exacerbated by hot money flowing in and out of economies.
The monetary authorities also require sustenance from national currencies, SDRs are a still a side dish, though of course the BRICS want to make them a main course. SDRs also remain a basket of national currencies anyway.
I suspect that the the gold burst today was due to the easing up of the Greek Crisis after the EU/German announcement of the bailout. The idea being:
Greek collapse -> Euro Collapse –> dollar rally -> gold drop.
Greek bailout –> Euro OK –>Dollar selling –> gold jump.
By the way, greeting to the other Chris….!
@Chris
German bailout ? Seriously. Greece and the IMF announced that they now need 120 billion euros. Stop the farce ! And 6 months fron now, bah 2 weeks from now Portugal will be asking 100 billion euros, 4 weeks from now Ireland 150 billion euros and Spain 200 billion euros. Europe is a farce like the USA. Like the UK.
Downgrade the US and UK let’s be fair!
http://boombustblog.com/reggie-middleton/2010/04/29/beware-of-the-potential-irish-ponzi-scheme/
Might as well repeat it here. Ireland it’s official ! will now beat Greece by a reounding margin as a bankrupt country. Who the hell wants to buy this ?
Danger danger Ponzi Scheme ahead. For Greece the deficit was 13,9% od GDP. And for Ireland the recordman it’s 20 % !!!!! A fantastic record.
“SDRs are a still a side dish”
SDR is the unit of account for our ‘monetary authorities’: the G20 central banks, IMF, and World Bank (along with the ECB and African Development Bank and perhaps also KfW, et.al.). It is hardly a ‘side dish’. SDR serves as a value index for the books of transaction for these authorities and for their asset denomination store of value. It is a privileged form of ‘currency’ within the context of sovereign trade and liquidity (not excluding the elite functioning behind the curtain of sovereign banks operating with diplomatic immunity).
“The banks do need to be regulated”
Yes, but not regulated out of existence by other banks which claim privileged status because of Bretton Woods legislation and bravado.
“The banks generated the crisis with massive liquidity (with cheap money from central banks and credit/debt creation). The BIS warned of a potential credit crisis, the Basle reforms (while insufficient) do address many of the excesses of the international banks.”
The sovereign banks and BIS regulatory agency generated the crisis by allowing behavior which was then condemned, and by provided liquidity where credit should not have been extended and through fraud. These central banks and G20 governing structure are now set to complete the fraud by acting on their own volition and through their own fashionable tyranny in denying the rights of other banks to operate in the fashion the sovereign banks hope to retain. The sdr liquidity is the backdrop to this scene.
The end to the means is the new reserve system fashioned in a Keynesian dressing room and saddled to ride by the rhetoric and gobbly-dee-gook sprung from four generations of IMF inspired colonialism.
Look to your betters for they will remain so: better off and better able to retain their control.