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Morning Monkeys,

Moody's has recently downgraded France from AAA to Aa1, following action taken by S&P earlier this year. My personal favorite ratings agency, Egan Jones, has long since had France at just north of "crap junk" at BBB+. Gotta love the little guy.

ZeroHedge has a pretty good recap. Strangely, after reading their take on the situation, I don't feel the need to buy small arms, physical gold, and farmland in Kansas. I think they're losing their touch.

So, what does everyone think this will mean for Europe? Or are they already so universally screwed that this is just a drop in the bucket?

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Comments (11)

  • Going Concern's picture

    Haha, ratings agencies are kind of a joke these days. With CRA discussions happening as we speak between The Three Musketeers (European Commission, Parliament, Council) to decide on the exact manner to which the ratings agencies should be regulated in Europe, Moody's couldn't have picked a worse time to literally thumb their nose at the hands that feed them!

    “The new day brings new hope. The lives we’ve led. The lives we’ve yet to lead. A new day. New ideas. A new you.”

  • The Biz Kid's picture

    Although they are a joke they do have major market implications for many of the largest allocations of capital. Many Sovereigns, pensions, etc have very strict guidelines on what paper they can and cannot hold. So yeah. It kind of does matter. Even though ratings changes lag fundamental changes in companies/economies they can move the market in technical ways that can present opportunities.

  • roofstreet's picture

    im surprised to see they were still at AAA....but everyone is screwed...it's just a matter of time now

    great pic choice....lol

    "...the art of good business, is being a good middle man, putting people togeather. It's all about honor and respect."

  • Dedline's picture

    Topic picture definitely increased your click through rate. I was under the impression it always had a crap rating, sounds like they're getting things back to right.

  • In reply to Dedline
    mikesswimn's picture

    Heist:
    Topic picture definitely increased your click through rate. I was under the impression it always had a crap rating, sounds like they're getting things back to right.

    I try to use a topic picture to make up for the fact that I'm a substandard writer. Genius, I know.

    "My caddie's chauffeur informs me that a bank is a place where people put money that isn't properly invested."

  • In reply to The Biz Kid
    mikesswimn's picture

    The Biz Kid:
    Although they are a joke they do have major market implications for many of the largest allocations of capital. Many Sovereigns, pensions, etc have very strict guidelines on what paper they can and cannot hold. So yeah. It kind of does matter. Even though ratings changes lag fundamental changes in companies/economies they can move the market in technical ways that can present opportunities.

    This is a fact that is regularly overlooked. Insurance companies, banks, and pension funds, are huge holders of soverign paper and are usually buyers out of a need for compliance.

    Here in the US, I'll be interested to see how FinReg will affect this same condition. From what I understand, it requires even higher concentration of top rated bonds. Many in industry are talking about increasing their use of derivatives for replication, which if this is the case, may end up making FinReg counter productive. Par for the course for financial regulation at the federal level.

    "My caddie's chauffeur informs me that a bank is a place where people put money that isn't properly invested."

  • State of Trance's picture

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  • In reply to State of Trance
    roofstreet's picture

    "...the art of good business, is being a good middle man, putting people togeather. It's all about honor and respect."