Eurocrats say the darnedest things
Is it election time in the EU or am I missing something?
As tired as I am of writing about the Eurocrats crazy antics, these guys are veritable Energizer Bunnies of disingenuity. They just keep going and going and the past few days have been no exemption.
For those who may have missed it; Moody’s, while sending out warnings that Portugal might need a second bailout, downgraded the country’s debt four notches to Ba2 – JUNK. As what usually happens, the currency fell, equity rallies are halted, and morale drops. Typically a politico or two would shoot a few words about the sinister, evil market, but not in the EU, oh no siree, dem euros are calling out for war!
We must break the oligopoly of the rating agencies...Looking into the regulation of rating agencies to determine whether there are some measures that need to be taken with regard to the prevention of possible conflicts of interest and other matters...
The president of the European Commission, the German finance minister, the European Parliament and Spanish and Portuguese business leaders are leading a charge of unparalleled force against rating agencies and are calling for the creation of a European rating institution
Funny, did they forget that they’re still trying to please them for Greece?
Reminds me a lot of Idiocracy.
Granted, Moody’s motive for the downgrade is still up for speculation; nothing has happened in Portugal to merit such a drastic downgrade, and while far from being a mystical land that grows moneytrees, it is definitely not the economic wasteland rife with tax evasion and dead businesses that Greece has become.
Equally mind boggling is the EU’s proposal to create their own ratings agency – despite the power held by the Moody’s, Fitch, and S & P, their credibility is nil so what makes them think an obviously biased creation of theirs would have any?
How about you monkeys? Will you give any credence to an EMU ratings agency?
Do you even listen to Moody’s or the S & P?
I'm curious how the Euro monkeys here feel about how things are going on there.
Anyway, how this whole debacle will play out nobody knows, one thing’s for sure though; if the EU keeps poking the Ratings Agency bear, they will surely get mauled.
Have a good one WSO.
Europe is free to create their own regulated rating agency. And Fitch, Moody's, and S&P will continue giving their ratings. The question: will global and domestic investors care what the regulated European rating agency has to say or will they stick with a relatively independent, private third party? I think the answer is clear. And given the clear answer, Europe would be wasting its valuable time and money.
I believe Europe should create an independent rating agency (yes, I believe it is possible if appropriate regulation is put into place ), this would at least increase competition on the European ratings space, that would (hopefully) translate into higher quality rating judgements.
However, in the end of the day, as anyone that built a valuation model before knows, the NPV/Rating grade will equal 3X, 5X, [insert any other number that someone higher up tells you to]X.
Europeans are like Stalin:IF YOU DONT LIKE REALITY THEN CHANGE IT. I wont say that the current Rating Agencies are perfect,but at least they are private.So which company will you trust,a private one or one created by the state-rating its own "shareholders"???Even if they do create own it will fail (who knows about Chinese RA's??There are some...)
PS.The member-states are the ones paying in order to have their bonds rated??So why they dont drop RA's themselves in the first place???
From a Greek guy...
The independence part is the one I haven't figure out how to put into practice... it would have to be something like the ECB, but can't be the ECB since they are an interested party.
Regarding the countries paying for their ratings, as you know, if you are not rated your potential investors pool will decrease considerably.
Then hire DBRS...But we all know that if DBRS starts giving high ratings to PIGS then I will immediately lose its credibility... I know that RA's make mistakes,and dont always give the appropriate rating.But we must examine this on a case by case basis:LEHMAN-they made a huge mistake.PIGS-They are giving appropriate ratings.
Have you also though what would happen if,under pressure from stupid Eurocrats,RA's assigned high ratings to the PIGS?This would have zero effect on their deficits...So if in Greece the situation remains the same,then the country will default.And what will everybody say??The RA's had a assigned a good rating to a bankrupt entity...
Great post man, you routinely help me understand the double talk and cut through the crap.
Doublespeak 101: In today's class, we will explore translations into various languages. Let's start with a phrase: The patient has a fever and needs medication
1 - it is not free, of course, but we acknowledge the problem
So...have we already forgotten
Not taking their side, but hoo boy, you sure seem to get off by venting at "them stoopid euroz"
It's a convenient time to bash the rating agencies but the punishment should have been dealt after the mortgage crisis, not when they're trying to put their act together and are actually being truthful.
The weird thing to me is that by trying so hard to avoid the default tag, politicians are actually endangering their banks because they're keeping the CDS they own from triggering. The eurozone can survive an orderly restructuring at the periphery but politicians are bent on making it as chaotic as possible by kicking the can down the road.
@UFO, Thanks dude, glad to see my rants be of use lol.
@Frab, Yeah I know how it looks but I'm definitely not blind to what's going on in the US and I've actually ranted a lot about it before. What's different though is that American politicians always do the same boring thing over and over, whereas the EU officials are a little more... creative. And besides, Midas can rant about them way better than I ever could so I leave them to him. Heh.
@GB, Couldn't agree with you more bro, its really hard to understand why they would do all of this, even their monetary policies don't make sense given how things are going. Thank God we're not in politics right?
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