Credit Rating cut on the way

BenjAii

Portugal has had it's credit rating cut to AA- by an S&P, this follows cuts for Spain & Greece.

Ireland remains as the only country recently put on negative outlook not yet to be cut. It can't be long now, I'm surprised it wasn't us before Portugal, they don't look in as bad shape as us.

http://www.ft.com/cms/s/0/31884d0e-e7f1-11dd-b2a5-0000779fd2ac.html

(BTW - IF you ever want to read FT articles sans the annoying registration page - just google the article title and access
it through google/google news)

gurramok

Surprising.

He also pointed to a 22 per cent increase in exports over the past three years and said lower oil prices and big investments in renewable energy would reduce the current account deficit, currently the equivalent of about 9 per cent of GDP, by 2.5 percentage points.

Ours was about 6% at close of 2008 with forecasts on who you believe at 9% at close of 2009.
Though their national debt is higher i believe which may have saved Ireland a little bit of time.

S&P forecast Portuguese GDP would contract 1.5 per cent this year and 1 per cent in 2010, with long-term average growth predicted at 1.5 per cent, lower than the eurozone average of 2.2 per cent.

Our own govt say contraction will be 4%, that is the worst in the Eurozone :eek:

Carawaystick

Ah yes, those ratings agencies - fingers on the pulse. The fact they got it so wrong helped the credit crunch - Why would anyone believe them now?

CONOR00

Carawaystick wrote: »

Ah yes, those ratings agencies - fingers on the pulse. The fact they got it so wrong helped the credit crunch - Why would anyone believe them now?

Given the Irish public sector [IPS] spends 55 Bn pa and takes in 35 Bn pa you wont need a credit rating agency to grade the credit status of the IPS, becasue the wont have any. Trouble with this extent of IPS mismanagement and wreckless behaviour is we all get sucked into the mess. Massive cuts in numbers, pay and pensions in the IPS is the only way forward now, either the government and IPS does it or the IMF do it by firing every second IPS employee.

techdiver

S & P has just cut our rating to AA.

I have just heard it on newstalk.

kippy

CONOR00 wrote: »

Given the Irish public sector [IPS] spends 55 Bn pa and takes in 35 Bn pa you wont need a credit rating agency to grade the credit status of the IPS, becasue the wont have any. Trouble with this extent of IPS mismanagement and wreckless behaviour is we all get sucked into the mess. Massive cuts in numbers, pay and pensions in the IPS is the only way forward now, either the government and IPS does it or the IMF do it by firing every second IPS employee.

Seriously,
Have you any CLUE about what you are talking about?

Duiske

techdiver wrote: »

S & P has just cut our rating to AA.

I have just heard it on newstalk.

Yea, just heard that. Not good news for Cowen coming up to this budget.

CONOR00

Kippy

"Seriously,
Have you any CLUE about what you are talking about?"

Please point out to me where I am wrong in what I say.

The IPS has engaged in profligacy and waste on a grand scale using tax takes from the construction boom. That money is gone and we now have only bust in construction and elsewhere and tax monies have collapsed. The IPS has nowhere else to go to fund its gross overspending. Even bankers are baulking at the Irish Government/IPS mess. We are currently spending 12 % of our tax take on interest repayments and if we continue to spend as before we will pay 25% of our tax take on interest, according to the Irish Times on Friday.

Either the Irish government sorts this or the Germans/IMF will. They will sort it by firing a huge percentage of public servants and reducing wages and pensions for the rest. Personally I hope they start with IPS management and so called boards of directors, who have overseen the genesis of a truly sorry mess.

kippy

CONOR00 wrote: »

Kippy

"Seriously,
Have you any CLUE about what you are talking about?"

Please point out to me where I am wrong in what I say.

The IPS has engaged in profligacy and waste on a grand scale using tax takes from the construction boom. That money is gone and we now have only bust in construction and elsewhere and tax monies have collapsed. The IPS has nowhere else to go to fund its gross overspending. Even bankers are baulking at the Irish Government/IPS mess. We are currently spending 12 % of our tax take on interest repayments and if we continue to spend as before we will pay 25% of our tax take on interest, according to the Irish Times on Friday.

Either the Irish government sorts this or the Germans/IMF will. They will sort it by firing a huge percentage of public servants and reducing wages and pensions for the rest. Personally I hope they start with IPS management and so called boards of directors, who have overseen the genesis of a truly sorry mess.

The government should indeed make cuts but willy nilly cutting of jobs means that you could end up getting rid of the "better" staff and keeping the deadwood. If they have a chance to do this themselves it SHOULD be done properly. We still aren't near IMF territory and we really dont want the IMF here.....

Anyway, a bit more of an on topic question. When did these "ratings" start and what is Irelands historic rating by the same agency?
Kippy

Diarmuid

kippy wrote: »

When did these "ratings" start and what is Irelands historic rating by the same agency?

You're asking an irrelevant question. The only relevant question is "what impact does this have on our cost of borrowing". The answer, is it will cost us but it was probably already priced into the market prices.

kippy

Diarmuid wrote: »

You're asking an irrelevant question. The only relevant question is "what impact does this have on our cost of borrowing". The answer, is it will cost us but it was probably already priced into the market prices.

It just something I would like to know to be honest. I know it has no impact on our current situation but its to expand my knowledge a little.

Diarmuid

kippy wrote: »

It just something I would like to know to be honest. I know it has no impact on our current situation but its to expand my knowledge a little.

I think we gained AAA in 2000 (or around then) and Iceland were AAA rate until September, then A- now BBB- I think.. The rating agencies have been caught with their pants down recently but as I said the only question is how it impacts our borrowing cost.

CONOR00

kippy wrote: »

The government should indeed make cuts but willy nilly cutting of jobs means that you could end up getting rid of the "better" staff and keeping the deadwood. If they have a chance to do this themselves it SHOULD be done properly.

I do not share your trusting and optimistic view of management in the IPS. I cannot think of any undertaking on the spending side that has been done properly in the IPS.

kippy wrote: »

We still aren't near IMF territory and we really dont want the IMF here.....

If this budget does not cut IPS spending dramatically expect our credit rating to plummet over the next few months and expect to be in IMF talks by year end. No sane person will lend the money the government requires to maintain spending at current levels and the IMF is the lender of last resort. If we cannot manage our finances we have nowhere else to go. When we do go to the IMF we will get what we fully deserve in terms of management of public finances.

kippy

CONOR00 wrote: »

I do not share your trusting and optimistic view of management in the IPS. I cannot think of any undertaking on the spending side that has been done properly in the IPS.



If this budget does not cut IPS spending dramatically expect our credit rating to plummet over the next few months and expect to be in IMF talks by year end. No sane person will lend the money the government requires to maintain spending at current levels and the IMF is the lender of last resort. If we cannot manage our finances we have nowhere else to go. When we do go to the IMF we will get what we fully deserve in terms of management of public finances.

I advised what SHOULD be done, I didnt anywhere say I expected it to be done. Willy nilly cuts are not good, well thought out and logical ones are. As I said I dont expect it to happen properly.
Have you read what happens to countries when the IMF come in? Not good. And to be fair I think we are still some way off that happening.
Kippy