Portuguese Downgrade; Is Ireland next?

rumour

I've just had an email from Goldcore stating:

The Moody’s downgrade of Portugal has led to a brutal sell off in Portuguese debt in morning trade which has seen Portuguese 10 year bond yields surge from 11.02% to 12.23%. Yields on Portuguese two-year notes soared 212 basis points to over 15.14 percent. There is increasing speculation that another downgrading of Ireland is imminent and Ireland’s 10 year yield has surged to over 12%

To those in the know are we headed for this?
Is this why Noonan is suggesting a harsher budget?

Scofflaw

rumour wrote: »

I've just had an email from Goldcore stating:



To those in the know are we headed for this?
Is this why Noonan is suggesting a harsher budget?

Who would actually be "in the know"? And why would such billionaires be posting on boards.ie?

amused,
Scofflaw

rumour

Scofflaw wrote: »

Who would actually be "in the know"? And why would such billionaires be posting on boards.ie?

amused,
Scofflaw

You mean your not one of them?

There are a few people here who follow the markets and work in trading houses, it is an economic forum???

Also I don't think Moody's downgrades are exclusive secrets to Billionaires admittedly they may pay to get the info first, however generally Moody's and S&P follow the market rather than lead it.

Unless of course you have information to the contrary which would put you 'in the know':rolleyes:

Godge

Does it matter? We won't be going back to the markets until at least early 2013, possible even as late as 2014 so it is the rating then that matters.

rumour

Godge wrote: »

Does it matter? We won't be going back to the markets until at least early 2013, possible even as late as 2014 so it is the rating then that matters.

Does that mean we'll need a second bailout?

Godge

rumour wrote: »

Does that mean we'll need a second bailout?

No, we have set aside money from the IMF that is ringfenced for the banks if they need it. If they don't need it (and we will probably know this by early next year), the IMF may agree to switch the money over to dealing with our deficit and if the economy has begun to grow and the deficit is under control, that may mean the money lasts until 2014. Even with less optimistic assumptions, we may be able to stay out of the markets until April 2013.

ardmacha

Does it matter? We won't be going back to the markets until at least early 2013, possible even as late as 2014 so it is the rating then that matters.

Is there not an issue that the ECB cannot hold junk bonds as collateral from banks etc?

Godge

ardmacha wrote: »

Is there not an issue that the ECB cannot hold junk bonds as collateral from banks etc?

Yes, I had forgotten that, was only thinking about how long before we need to borrow on the market. That is something that came up in a discussion about the Greek situation and their potential default. Can't remember exactly what the conditions were.

PhatPiggins

ardmacha wrote: »

Is there not an issue that the ECB cannot hold junk bonds as collateral from banks etc?

The ECB can't buy government bonds either but that hasn't stopped them circumventing that rule.

All jokes aside is it time we rid ourselves of ratings agencies? Their track record is hardly sparkling and they have far, far too much of a vested interest.

DJCR

rumour wrote: »

You mean your not one of them?

There are a few people here who follow the markets and work in trading houses, it is an economic forum???

Also I don't think Moody's downgrades are exclusive secrets to Billionaires admittedly they may pay to get the info first, however generally Moody's and S&P follow the market rather than lead it.

Unless of course you have information to the contrary which would put you 'in the know':rolleyes:

Hmm, conspiracy theories abound.

It all comes down to Moody's and S&P being private companies rating a soverign nations' debt.

What gives these guys the right to do and how do they make money?

I'm a billionaire and I feel like making a few more squids so I buy bonds in country "1" with a "BB" rating with a 10% interest rate, leave my money there. Give the ratings agency a nudge (or a certain someone responsible for the rating) to raise the rating to "AA" which means that the interest rate drops to 5% for new people buying in (less risky - easier to sell) ...... Billionaire then sells on his bonds at cash rate of say 7.5% interest (takes cash on the spot - thats a 7.5% profit on the spot with no risk) ........ The others have to wait for maturity to make their 10% ... anything could happen. Still though its a nice way to make 150 Million squids.

It also works the other way around, except because of the size and strength of the Euro it could be a currency.... Why would some one want to take down the Euro?? ..... who knows.....

*DJCR covers his head with his jacket and slowly retreats back into a dark corner

serfboard

PhatPiggins wrote: »

All jokes aside is it time we rid ourselves of ratings agencies?

Yes. The sooner we get rid of these f**kers the better.

PhatPiggins wrote: »

Their track record is hardly sparkling

You have AAA bonds and BB bonds. You put them all together into a CDO and hey presto! It's AAA rated! How did that happen? It's magic!

Except it's not. Snake oil salesmen.

PhatPiggins wrote: »

and they have far, far too much of a vested interest.

They were giving lessons in how to organise structured products for rating ... then coming along and rating those products. Conflict of interest, anyone?

Scofflaw

rumour wrote: »

You mean your not one of them?

There are a few people here who follow the markets and work in trading houses, it is an economic forum???

Also I don't think Moody's downgrades are exclusive secrets to Billionaires admittedly they may pay to get the info first, however generally Moody's and S&P follow the market rather than lead it.

Unless of course you have information to the contrary which would put you 'in the know':rolleyes:

Were I, or anyone here, able to reliably predict what the markets will do, they should be able to make themselves billionaires! Also, were it reliably possible in general, we presumably would not be in the current crisis.

Anyway - hard to say, because it depends on a mixture of politics and market sentiment. I don't think much has changed in Ireland's underlying position, but the ratings agencies demonstrated during the boom that they're not necessarily that good at spotting underlying trends, so that may not mean anything. I'm not a betting man, and this is fundamentally betting territory, because there are so many factors in play.

cordially,
Scofflaw

RichardAnd

Scofflaw wrote: »

Were I, or anyone here, able to reliably predict what the markets will do, they should be able to make themselves billionaires! Also, were it reliably possible in general, we presumably would not be in the current crisis.

To be honest, if God himself had stepped down from the heavens and into Bertie's office at some point in the late 90s with warnings about what would happen if he didn't do X, Y or Z, I would wager the all-mighty would be succinctly told to go and commit suicide...

Scofflaw

RichardAnd wrote: »

To be honest, if God himself had stepped down from the heavens and into Bertie's office at some point in the late 90s with warnings about what would happen if he didn't do X, Y or Z, I would wager the all-mighty would be succinctly told to go and commit suicide...

Fair enough - I amend it to "were it reliably possible, the rest of the world wouldn't be having a crisis". We still would, because we're special.

cordially,
Scofflaw

PhatPiggins

Is it possible for the ECB or its puppet banks to purchase gov bonds below market value?

dsmythy

I see the European Commission disapproves of this downgrade. Their words to the agencies - don't downgrade countries. I bet they'd love everyone to try and sweep things under the carpet.

Owldshtok

serfboard wrote: »

Yes. The sooner we get rid of these f**kers the better.

You have AAA bonds and BB bonds. You put them all together into a CDO and hey presto! It's AAA rated! How did that happen? It's magic!

Except it's not. Snake oil salesmen.

They were giving lessons in how to organise structured products for rating ... then coming along and rating those products. Conflict of interest, anyone?

Exactly!

They stink so much

later12

Perhaps the Chinese were up early buying Portuguese debt. The 10yr yield is down.

eco2live

We looking more likely to be getting into the markets every day. NOT!

Time for some action to return Ireland to competitiveness and take on the vested interests or we will lose everything.

Why does Ireland not try to plan on balancing its books and we would not need to go to the markets except for investment.

If the government and the people are not going to accept a big hit up front in their standard of living then we might as well default and print our own currency again so that a jar of coffee would be 100 shamrock notes.

later12

dsmythy wrote: »

I see the European Commission disapproves of this downgrade. Their words to the agencies - don't downgrade countries. I bet they'd love everyone to try and sweep things under the carpet.

European authorities - for want of a better word - are acting like a prima donna GAA county minor player in all of this. They won't listen to expert advice, they throw a strop in the face of criticism, and appear to think themselves both invincible and irreplaceable. Unless exceptionally talented, such careers are usually short-lived.

Unless overhauled, the Eurozone in its present form will be short-lived too. Instead of throwing a hissyfit when the inevitable occurs, why don't they just put their heads down and prevent upcoming dangers from becoming inevitabilities?

What, for example, are European authorities going to do to prevent an Irish downgrade? SFA. But watch them line up to whinge about it ex post.

rumour

eco2live wrote: »

We looking more likely to be getting into the markets every day. NOT!

Time for some action to return Ireland to competitiveness and take on the vested interests or we will lose everything.

Why does Ireland not try to plan on balancing its books and we would not need to go to the markets except for investment.

If the government and the people are not going to accept a big hit up front in their standard of living then we might as well default and print our own currency again so that a jar of coffee would be 100 shamrock notes.

Increasingly I see this as the only logical conclusion to our current predicament. Politically we lack the will power to balance our books and will therefore remain dependent on financial aid that is delivered under politically derived conditions that are also unsustainable by any rational analysis.
These political conditions are motivated by what? As in all these issues if you follow the money it provides answers. The markets are usually keen on this stuff and have written off Ireland along with Greece and Portugal but they know someone is owed the money we pretend we can pay back.
The markets are circling like vultures until the get to the bottom of whose going to fess up to the loss they made ploughing money into Ireland.

I'm beginning to see enormous similarities between the final stages of Anglo and the current carry on at the ECB.

Richard tea

rumour wrote: »

Does that mean we'll need a second bailout?

Second bailout = yes.............If you believe this to be a leaked report from a recent builderberg meeting

''IRELAND
The discussion on Ireland was led off with sobering statistics which none of the attendees wanted to hear. Just like Greece, Ireland is an economic nightmare, close to becoming yet another European economic protectorate. Even though the official statistics of unemployment is up to 15%, Bilderberg internal numbers are much closer to 21%. Not to be outdone by the spectacularly bad news, the interest payments are half of all the income tax raised in the country and the debt is growing. What´s more, the total debt is 100% of Gross Domestic Product.

Ireland´s unpaid bank debt, around 125 billion, as well as Irish State fiscal debt, courtesy of EU-IMF partnership has weighed down the Irish economy and Irish taxpayers with a burden so great that it is beyond Irelands capacity to carry it.

What is inevitable, admitted Bilderberg attendees, is just like Greece, Ireland will need a second bailout from the EU-IMF. Others were even more blunt. The European Union is in a survival crisis, said one European Bilderberger. What seems to worry Bilderberg is the lack of fortitude and political will across the European Union. As one Bilderberg financial analyst stated, the markets are stuck between the rock and the hard place. The markets can cope with good news and they can cope with bad news, but what the financial markets cant stand, is indecision. And thats all we have across the board. Nobody has any ideas how to get out of this.

But, as another Bilderberg bluntly reminded the attendees, it is not one but three crisis we have to deal with: a debt crisis, a political-economy crisis, and a political crisis.. And as Bilderberg knows, it is impossible to deal with all three at the same time.
Bilderberg has admitted that the Irish banks are in over their head, having tremendous difficulties raising funds, while at the same time, the banks are bleeding money, as people have lost faith in the system. With the Northern Rock experience in Britain still fresh in everyones mind, the Irish are not taking any chances. For now, the mainstream press has kept this information under wraps, but as Bilderberg admitted, it is just a matter of time before it explodes in our faces..

One Irish Bilderberger admitted that the Irish banks could very well run out of money before the Irish government does.

However, what worries Bilderberg is the reaction of the Irish citizens. As one Bilderberg asked, will Ireland want to borrow money to pay back the bondholders and European banks who gambled on the Irish boom?

To solve the mounting crisis, European government is proposing a massive power grab as part of a long-range plan to save the Union. If the plan is approved, the EU government will set the rules in the future and police itself and any nation, which breaches the rules or disagrees with the draconian measures implemented by the EU, will have their voting rights withdrawn. As one European Bilderberg openly admitted, What we are heading towards a form of real economic government.''

rumour

Wow...I could have wrote that myself. I love the bit about the 'power grab'. I suspect this will be immediately repudiated by the usual sources and in about three years time we'll be told we all wanted it and it was our democratic choice. Hell we even voted for it in our recent referendum:rolleyes:.

Scofflaw

Richard tea wrote: »

Second bailout = yes.............If you believe this to be a leaked report from a recent builderberg meeting

It's not a "leaked report", but an article which contains a certain amount of quotes from attendees, stuff from some of the talks, plus some of the author's own comments, obviously.

While Bilderberg stuff is normally cast into CT, as far as I know those are genuine quotes from attendees and from the meeting - and since the Bilderberg meetings, all conspiracy theories aside, qualifies as a pretty influential think-tank, that material is OK.

Don't let it give you ideas, though.

moderately,
Scofflaw

1huge1

On a lighter note

Hackers Downgrade Moody's Website to Z
http://www.theatlanticwire.com/global/2011/07/hackers-downgrade-moodys-website-z-/39694/

When Moody's ratings agency downgraded Portugal's debt to junk status this week it was hard to get any non-wonk this side of the Atlantic to care. Even investors started to "yawn at the apocalyptic headlines," notes Time's Roya Wolverson. But pro-Portugal hackers seemed to have found a way to get the the world--or at least Moody's--to pay attention to its outrage over the downgrade. In what appears to be either a successful hack or a somewhat less impressive URL trick, a webpage on the Moody's websites was defaced with a letter pledging that the sword of Afonso Henriques (the first king of Portugal) "will be shoved up your ass." It adds that "Afonso ranked your website as Z--":

pictures within link

rumour

Scofflaw wrote: »

Don't let it give you ideas, though.

I trust you will accept I have no intention of being rude or offending but in the interests of establishing the acceptable parameters can you please expand on the diktat?

hmmm

You can't "get rid of the ratings agencies". It's like saying you're going to "get rid of the met office" because you don't like their predictions. The ratings agencies say what they think the real situation is, and their customers choose to pay for this advice or not. Whether the EU or ECB or anyone here agrees or disagrees is irrelevant, their customers make the decision who they will trust.

DJCR

hmmm wrote: »

You can't "get rid of the ratings agencies". [...] The ratings agencies say what they think the real situation is, and their customers choose to pay for this advice or not. [...] their customers make the decision who they will trust.

The question .... who are their customers? I don't think Portugal looked for the last report and I don't believe the EU would have commissioned it.

And seen as they are profit making entities there will always be that emphasis on pleasing said customer, and with any money making business "the customer is always right" ... or is it?

Scofflaw

rumour wrote: »

I trust you will accept I have no intention of being rude or offending but in the interests of establishing the acceptable parameters can you please expand on the diktat?

There are two versions of Bilderberg - or two ways of looking at it, if you like:

a. Bilderberg is a highly influential regular think-in by political and economic leaders. What is discussed at Bilderberg is speculative and reflects the fact that the event is intended to promote "out of the box" thinking about major issues.

b. Bilderberg is a secretive gathering of the elite who really run the world - what is discussed at Bilderberg sets the world agenda.

Version (a) is fine in the Politics forum - version (b) is for the Conspiracy Theories forum. In general, the problem with Bilderberg is that the meeting is confidential, and therefore "reportage" about Bilderberg is dominated by speculation rather than facts, which means that most of it is by people who subscribe to version (b).

While some might say that in the absence of the facts, we should be free to use the speculation, that material (and that attitude) properly belongs on the CT forum. That we don't know what happens at Bilderberg meetings is just something we have to live with as far as political discussion goes - filling up the vacuum with speculation isn't a useful substitute.

cordially,
Scofflaw

Scofflaw

DJCR wrote: »

The question .... who are their customers? I don't think Portugal looked for the last report and I don't believe the EU would have commissioned it.

And seen as they are profit making entities there will always be that emphasis on pleasing said customer, and with any money making business "the customer is always right" ... or is it?

The customers of the ratings agencies are market traders, who use the ratings to determine whether to buy or sell - in theory, therefore, if the ratings agencies persistently get things wrong, the market traders will stop using their services. In theory, also, the ratings agencies therefore pay attention to the real fundamental values underlying the market - those being the values that in theory determine the long-term value of traded items.

There's a little problem with that, which is that if everyone follows the ratings agencies' advice, the ratings can become self-fulfilling prophecies. During the boom/bubble period, the ratings agencies consistently rated banks like Anglo, and sovereigns like Greece, far higher than has turned out to be a good reflection of their underlying strength...which helped those entities continue to borrow unsustainably. They're now rated very very low, which means they cannot access the markets, and have to be bailed out with further massive debt at high interest rates, also unsustainable.

So there's an argument that the ratings agencies obviously weren't paying attention to underlying fundamentals during the boom, so there's a suspicion they're not now either - instead, they're simply reflecting market sentiment, and relying on the self-fulfilling nature of ratings to prove them right.

cordially,
Scofflaw

sarumite

hmmm wrote: »

You can't "get rid of the ratings agencies". It's like saying you're going to "get rid of the met office" because you don't like their predictions. The ratings agencies say what they think the real situation is, and their customers choose to pay for this advice or not. Whether the EU or ECB or anyone here agrees or disagrees is irrelevant, their customers make the decision who they will trust.

I think its a bit more complicated than that though. The Met office cannot affect the weather by its predictions, wherease a ratings agency can affect the markets by its predicitons. If moody's or S&P or whomever else says a countries rating is xxx, then depending on what they say investers may choose to invest or not. As such, the ratings agency can push or pull the markets in one direction or the other merely by speculating on where they think the markets are going, thus it becomes a bit of a self fulfilling prophecy.

DJCR

Scofflaw wrote: »

The customers of the ratings agencies are market traders, who use the ratings to determine whether to buy or sell - in theory, therefore, if the ratings agencies persistently get things wrong, the market traders will stop using their services. In theory, also, the ratings agencies therefore pay attention to the real fundamental values underlying the market - those being the values that in theory determine the long-term value of traded items.

There's a little problem with that, which is that if everyone follows the ratings agencies' advice, the ratings can become self-fulfilling prophecies. During the boom/bubble period, the ratings agencies consistently rated banks like Anglo, and sovereigns like Greece, far higher than has turned out to be a good reflection of their underlying strength...which helped those entities continue to borrow unsustainably. They're now rated very very low, which means they cannot access the markets, and have to be bailed out with further massive debt at high interest rates, also unsustainable.

So there's an argument that the ratings agencies obviously weren't paying attention to underlying fundamentals during the boom, so there's a suspicion they're not now either - instead, they're simply reflecting market sentiment, and relying on the self-fulfilling nature of ratings to prove them right.

cordially,
Scofflaw

Do you actually believe what you just said... in all honesty.

Thats the way it's supposed to work, and thats what happened but do you really believe that the mistake was made due to genuine not "looking" at the fundamentals or "glossing" over said fundamentals.

later12

DJCR wrote: »

The question .... who are their customers? I don't think Portugal looked for the last report and I don't believe the EU would have commissioned it.

The principle is that the issuer or seller pays.

There a conflict of interest in that, of course, but CRAs are often accused of trying to make up for it by being extra critical of governments.

An issue I would have with the issuer pays model is how it affects financial products. What investor is going to traipse off very often to the CRA with a 10,000 page CDO prospectus? He might do so occasionally, but not as frequently as these products come on the market at present.
There is no incentive there for issuers to sell simpler, transparent financial products because he is going to have it rated himself, and all the buyer will read is the rating.

Another issue i would have is how long it takes CRAs to alter their ratings. If the rating fluctuated at a more continuous pace, you wouldn't get the same bottleneck in and out of the traps to sell or buy specific trades. In this day and age, it shouldn't be too difficult for CRAs to update their ratings more regularly

beeftotheheels

DJCR wrote: »

Do you actually believe what you just said... in all honesty.

Thats the way it's supposed to work, and thats what happened but do you really believe that the mistake was made due to genuine not "looking" at the fundamentals or "glossing" over said fundamentals.

I think almost anyone interested in economics would puzzle as to how if you throw a whole load of US subprime mortgages into an Irish company which issues a bunch of loan notes (and thus needs the interest and repayment of the subprime mortgages to repay its borrowings) that any bonds issued by that Irish company can be rated as investment grade (and many of them were rated as AAA).

If you put a load of rubbish in, only alchemy can get you gold out the other side and as most of us, outside the world of finance, have accepted for several hundred years, alchemy is a doomed science.

View

Scofflaw wrote: »

The customers of the ratings agencies are market traders, who use the ratings to determine whether to buy or sell - in theory, therefore, if the ratings agencies persistently get things wrong, the market traders will stop using their services.

Based on accounts of the run-up to the sub-prime crisis, the threat that market traders would stop using their services was a contributory factor in the rating agencies handing out AAA ratings to questionable mortgage bonds (i.e. the sort where all the mortgage holders are semi-permanently in crisis as, even in good times, they are always close to defaulting).

Not that the market traders ever actually overtly threatened them though - that would have been improper of course - but hinting that they are considering taking their business elsewhere when you start looking too closely at something does influence independent decision making...

later12

beeftotheheels wrote: »

If you put a load of rubbish in, only alchemy can get you gold out the other side and as most of us, outside the world of finance, have accepted for several hundred years, alchemy is a doomed science.

Copper is the new gold!
Lithium is the new aluminium!
Silver is the new copper!

Lots of mathematics graduates work as traders; not many chemists though.

Scofflaw

DJCR wrote: »

Do you actually believe what you just said... in all honesty.

Thats the way it's supposed to work, and thats what happened but do you really believe that the mistake was made due to genuine not "looking" at the fundamentals or "glossing" over said fundamentals.

Since what I was saying was that the ratings agencies appear to have been about as much use as a blind monkey with a dartboard when it comes to spotting "real" market values...yes, I believe it in all honesty. That's why I threw in all the "in theory" stuff.

Mind you, if what you're asking me was whether I believe the ratings agencies were some kind of conspiracy against the public - no, or no more than business usually is, anyway.

cordially,
Scofflaw

beeftotheheels

The way it works.

Lender A used to lend to subprime borrowers in Utah. Every 3 months they wanted to get these mortgages off their balance sheet to free up capital to allow more lending.

So, they securitized them (by popping them into an Irish company which issued bonds "secured" on the mortgages). The logic was that the first cash that went into Irishco was used to pay off the senior bonds meaning that they were guaranteed to be repaid and therefore warranted a higher rating. The more bonds of investment grade you could squeeze out of the portfolio, the cheaper it was in effect for the sponsor (Lender A) to raise money to fund their addiction to subprime mortgage lending.

Now, on an issuance Lender A has to pay a rating agency €xm to rate the bonds, but you have to remember that that is €xm every 3 months or so.

So, on one issuance say S&P decided to really investigate the quality of the underlying assets, and concluded that only 20% of the issued bonds warranted an investment rating (when previously Lender A had been used to 60% getting that rating). So, at the time there was probably little Lender A could do, if they sacked S&P mid issuance then the markets would be a chatter.

But fast forward three months to the next deal. Lender A puts the ratings out to tender and awards the work to Moodys. Moodys know why the work was put out to tender - S&P gave a bad rating. S&P also know. Moodys want to keep the work so they look for all the positives that they can find in the bonds, and ignore anything which is short of blatantly negative.

But S&P are now doing a rating for Lender B, and "educated" by their experience of losing Lender A as a client, and knowing that Moodys were prepared to give a softer rating, they are less scrupulous in looking for negatives in Lender Bs portfolio.

So, the fact that the lender/ sponsor pays the ratings agencies creates an inherent, structural, conflict of interest.

It shouldn't be so, there are only 3 ratings agencies so if they all stood on principle then any sponsor could only change agency twice before facing up to reality. But, every business tends to concentrate on the €xm in fees definitely won or lost now, as against the potential reputational damage of engaging in delawarization, at some point in the future.

hmmm

Collateralised debt, like most things, is not all bad and not all good. People who don't understand the benefits like to offer up simplistic notions such as "all derivatives = bad" which is clearly untrue. Not to mention, much collateralised debt isn't even a derivative to begin with.

The structure of CDOs is very clever and, yes, AAA securities can emerge from junk in a CDO structure. The problem with CDOs is that some key underlying assumptions proved to be false. By securitising the debt and removing responsibility from the issuing bank, default rates unexpectedly went through the roof - the bank no longer had a need to pay close attention to credit quality, they just had to sell. Players entered the issuance market who adopted little or nothing in the way of quality control.

While it's a depressed market at the moment, I expect collateralised securities will make a big comeback in the future. There will probably be a sharp decrease in complexity, there will be a greater focus on the underlying credit quality and the purchasers will actually do some due diligence this time around.

hmmm

DJCR wrote: »

The question .... who are their customers? I don't think Portugal looked for the last report and I don't believe the EU would have commissioned it.

It's important not to forget that much banking and insurance/assurance regulations rely on ratings agencies. Even the ECB relies on rating agencies as part of their mandate prevents them from accepting collateral below a certain grade. Insurance, assurance & pension funds may be operating under mandates which require them to invest only in AAA products.

DJCR

Scofflaw wrote: »

if what you're asking me was whether I believe the ratings agencies were some kind of conspiracy against the public - no, or no more than business usually is, anyway.

cordially,
Scofflaw

Yeah that was sort of what I was getting at. I wouldn't say a conspiracy against the public though. I'd say the ratings agencies are being used as a tool to forward the ambitions of the few rather than the many.

rumour

DJCR wrote: »

Yeah that was sort of what I was getting at. I wouldn't say a conspiracy against the public though. I'd say the ratings agencies are being used as a tool to forward the ambitions of the few rather than the many.

I don't think you can really blame the ratings agencies for finally getting Ireland right. Spends twice what it earns without a hope of giving it back. Advice: don't put your money in there never mind a risky investment you haven't a hope of getting your money back. Seems pretty straightforward to me.

On an aside the rumours from last week were true then, which supports my opinion that the ratings agencies tend to react and formalise what the markets already know.

DJCR

rumour wrote: »

On an aside the rumours from last week were true then, which supports my opinion that the ratings agencies tend to react and formalise what the markets already know.

They are reactionary and do state the obvious to an extent. However, I just don't see how a private profit making company should be allowed to judge how soverign nations and the people in them are able to pay their debt.

I mean the downgrade today means absolutely nothing, we won't be borrowing from the markets again until 2013, so it's on that day that the ratings will matter, but not this one. So why bother rating us till then? What's in it for them? Who's driving it and why?

Scofflaw

DJCR wrote: »

They are reactionary and do state the obvious to an extent. However, I just don't see how a private profit making company should be allowed to judge how soverign nations and the people in them are able to pay their debt.

I mean the downgrade today means absolutely nothing, we won't be borrowing from the markets again until 2013, so it's on that day that the ratings will matter, but not this one. So why bother rating us till then? What's in it for them? Who's driving it and why?

The EU Commission apparently shares your views:

Statement by President Barroso on Moody's downgrade of Ireland

Yesterday's decision by Moody's to downgrade Ireland's credit rating is incomprehensible. Its timing, as the second quarterly review mission is preparing to announce its findings, is to say the least questionable.

The Irish government has shown determination and decisiveness in its implementation of the economic adjustment programme. Ireland's banks are being recapitalised and its financial system more broadly is being repaired, an essential step to getting the real economy back on its feet. Exports are growing strongly and the country is regaining competitiveness. All of this is set to underpin a return to growth this year which will begin to bring down unemployment in a sustainable manner.

This progress will be detailed further tomorrow by the heads of the joint Commission-ECB-IMF review mission to Ireland.

Much hard work lies ahead and clearly there can be no room for complacency. But Ireland is now on the right track.

"Incomprehensible" and "questionable" are pretty strong words from a bureaucracy.

cordially,
Scofflaw

later12

Incomprehensible = cannot be understood
Questionable = that which gives rise to questions.

The EU Commission cannot understand what is happening and is asking questions. Fantastic. Lets see where that gets them.

pat_mas

I'd say that when it comes to rating agencies, timing is quite questionable to say the least
Greece got 1st attacked by the markets just before QE1
Ireland got 1st attacked by the markets just before QE2

And guess what, now that the US debt ceiling drama (1) is getting stronger by the day and QE3 is being considered, Euro is attacked by every possible means (Portugal, Ireland, Italy, ...)


Bitch, Standard for Poors and Muddy's are just plain US sh#@e


(1): should be a comedy really because we all know it will be raised eventually

ei.sdraob

Awwww poor Ireland getting attacked, "its all de fault of dem evil markets" quick look over there! while our politicians continue to screw up /sarcasm

EoghanConway

So in conclusion, Ireland was indeed next.

DJCR

Yep, it makes no sense. The more I think about it the less sense it makes.

It stands to reason what was said before i.e. that they are paid to do this by large investors who want to know the risks should they invest.

Now, no one in their right mind is going to give Ireland money now so why are Moody's bothering to do it?

Especially now that the Euro is falling in value which makes are exports/tourism even cheaper. (I know this is only 2 sectors of a very bad economy but still.... they haven't got worse)?

pat_mas

ei.sdraob wrote: »

Awwww poor Ireland getting attacked, "its all de fault of dem evil markets" quick look over there! while our politicians continue to screw up /sarcasm

There's nothing our politicians can do except follow the EU/IMF established policies of austerity measures and state assets sales. Ireland does not have the critical mass to choose its destiny (the IE punt is not an option). I won't comment on the abilities of the politicians to sort that mess even a little bit (and that's anyone of them, wherever they're from)

All I was saying is: when a rating agency rates the US as AAA then this very agency is not qualified to issue ratings at all !!!

Scofflaw

later10 wrote: »

Incomprehensible = cannot be understood
Questionable = that which gives rise to questions.

The EU Commission cannot understand what is happening and is asking questions. Fantastic. Lets see where that gets them.

To be fair, I think that's:

Incomprehensible = cannot be understood in the context of the proper operation of the agencies

Questionable = gives rise to investigations

cordially,
Scofflaw