Ambrose Evans-Pritchard Is Back, Guns Blazing

Tyler Durden's picture

AEP is back, and he is angry...

Europe, Free Speech, and the sinister repression of the Rating Agencies

Before we all join the chorus of abuse against the robber agencies,
let us not lose sight of what is happening in the eurozone. The EU
authorities are attempting to muzzle free opinion, first by threatening
Fitch, Moody’s, and S&P with vague retribution, and then by drafting
restrictive laws to prevent them from publishing unwelcome messages.

It is financial repression, pure and simple. The same will be done to the press in due course. Then to you, dear reader.

“We must break the oligopoly of the rating agencies,” says German
finance minister, Wolfgang Schäuble. By “we”, of course, he means the EU
apparatus of coercion.

The European Commission has already created a pan-EU oversight body
with binding powers to breathe down the necks of these agencies. It will
draft restrictive legislation by the end of the year. The Portuguese
downgrade ensures that it will be even nastier.” Developments since the
sovereign-debt crisis show we need to take a further look at reinforcing
our rules,” said Commission chief Jose Manuel Barroso.

Mr Barroso came close to accusing the agencies of cartel activities and a malicious agenda.

“It’s quite strang that the market is almost dominated by only three
players. It seems strange that there is not a single rating agency
coming from Europe. It shows that there may be some bias in the markets
when it comes to the evaluation of the specific issues of Europe.”


What should have been done is obvious. The EU’s bail-out fund should
have been given powers mop up the bonds of countries in distress on the
open market at a hefty discount (as the ECB suggested). Investors would
have suffered condign losses, and the EU could have given Greece debt
relief by retiring bonds with no net loss to European taxpayers.

This elegant solution was blocked by Germany because it was seen as a
slippery slope towards a Transfer Union, and might have violated the
Grundgesetz. (In a sense the Germans are right, but you shouldn’t join a
currency union in the first place if don’t realize that it implies
fiscal union.)

Now, if the EU institutions wish to avoid being held hostage by the
robber agencies they should stop using the ratings as a basis for
lending collateral at the ECB. They should create their own more
rigorous method of assessing credit-worthiness, ignore the agencies
altogether, and make their case directly to global investors.

What the EU should not do is try to muzzle free opinion, or free speech. We are on a slippery slope.

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William Wallace's picture

Ambrose Evans-Pritchard is a great American.

DoChenRollingBearing's picture

His term "euro euphoria" alone should give him US citizenship.  In the best American tradition of calling them as he sees them.

JW n FL's picture

He should be Hanged with the rest of his reptilian brotherhood!


The Rope for ALL that have played a part in the undermining of this once Great Country!


What should have been done long ago!

JW n FL's picture

I'm just kidding! lets smoke a "J" and talk about how in the end karma will get them!

DoChenRollingBearing's picture

The J would have been a LONG TIME ago for this bearing...

Whalley World's picture

For me, a LONG TIME is last night!

LudwigVon's picture

Yah you can just bite the leaf 1/2 the year when your down south, who needs the J then? 

Problem Is's picture

Awe fuck... I just got my torch out of the garage...

thepsilocircus's picture

If by karma you meant zombie hordes ill throw down on that j =)

Ghordius's picture

Ambrose Evans-Pritchard might be a great American. Can't judge that.

What he absolutely does not understand is how much this is pissing off the Europeans. He seems to think that the rules of the game are written in stone and that if an agency which has been sleeping up to a few years ago says something, whole sovereign states have to just take it.

The people of Portugal have still not got a reason for this "sudden & strong move" and the Germans are furious. They think this is a naked political move by interests driven by who has how many CDS.


It all goes back to one major misunderstanding between cultures: BETTING. What is a normal behavior for some is a reckless sin for others.

CDS are bets that function as insurance. Now look how insurance is regulated and understood and compare it with CDS.

Insurance as a business grew out of two models: the British and the Swiss. The first is understood as third party betting, the second as mutual insurance (for which you have to be the owner of a similar item in order to cover the possible loss of your neighbor).

grok's picture

I'm quite sure he gets that.  You know in his article he says that investors should just ignore the ratings agencies, so I'm not sure how you got the part about him thinking that the ratings agencies' word is gospel

Mr Shush's picture

"The people of Portugal have still not got a reason for this "sudden & strong move" and the Germans are furious. They think this is a naked political move by interests driven by who has how many CDS."

The reason for the "sudden & strong move", as Evans-Pritchard makes fairly clear, is that the European (and German) authorities appear increasingly determined to force haircuts on holders of Greek debt. The ratings agencies, understandably, believe this implies that the same will happen in due course with Portuguese debt. Previously, the assumption had been that European taxpayers, via the ECB, the EFSF and the EFSM, would eat all the losses, making the bonds a safer investment for the private sector.

And CDS have in all probability damn all to do with it. I will be astonished if the move in yields turns out to be driven by CDS purchases rather than bond sales. The problem is that no-one wants to buy European periphery debt, not that people are betting against it.

MGHJFHD's picture

I wish more people would write sites like this that are actually helpful to read. With all the fluff floating around on the web, it is rare to read a site like yours instead.


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static's picture

Yeah "slippery slope"

like the Italian Banks charts..


static's picture

Yeah "slippery slope"

like the Italian Banks charts..


RobotTrader's picture

Threatening the ratings agencies should not be a surprise.

Skullduggery has been going on for years and years, basically the Plutocrats will pull whatever strings are necessary to goose stocks, keep interest rates low, and keep a lid on commodity prices.

Ultimate control via jawboning, cajoling, and using paper to manipulate markets.

Vic Vinegar's picture

In doing some RobotTrader archive-reading this week, I have one thing to say: come back to this site as a contributor dude.  That clearstation website sucks and you have too much to offer.

Bolweevil's picture

Are you referring to Robo Trader or Robot Trader? Two different people, same avatar. One was interesting once long ago, perhaps even contributed to the discussion. The other, not so much with a recent trend toward civility. I do miss the wildebeest.

Vic Vinegar's picture

I am refering to the cat from SoCal who posts pictures of the wildebeests.  I miss Robo and those pics.

Troublehoff's picture

Yep, the high market volatility day when he posted a bunch of kids 'playing' the markets with 360 game-pads, then cut to the Masai river... hundreds of wildebeest stampeding through the water... and many crocodiles lying in wait, watching


aye, back in the day (18 months ago), robo's pics were legendary

Vic Vinegar's picture

Are you telling me that at this stage of the game we have fake Robot Traders running around?  Because I don't want to live in a world where that is the case.  First 9/11 and now this.  

If the real Robo doesn't post a contributor article on this site soon: a) it's SeekingAlpha only for me and b) the terrorists truly have won.

FlyPaper's picture

Robot - good point.  Why is it that the rating agencies have not downgraded uncle Sam?  Cause uncle can change the law and put them out of business, which I consider to be nothing short of generally worthless after their Mortgage backed security "ratings."  Poor EU has no one to apply pressure to!  

Alienated Serf's picture

there has never been a culture of free speech in europe, much less free speech for rating agencies.  the UK is the world capital of libel tourism and in most of europe if you compliment someone on their tan you are liable to be charged with some sort of racial hatred claim.

Oh regional Indian's picture

Anyone thinking Europe enjoys free speech should take a placard saying "The holocaust never happened" and stand in the midst of a square/circle in Berlin.

The freeness of your speech will become clear in a heartbeat.

Google Ernst Zundel,a s an example.


three chord sloth's picture

The EU must be in worse shape than we figure if they are this petrified of even the slightest whiff of semi-truthiness wafting out from this bit-broken trio of feeble rating agencies.

steve from virginia's picture

Ambrose Evans- P suggests 'cuddling' the bondholders who lent willingly to Greece et al. hoping they'll come back and lend some more.

Fat chance w/o any hope of return even w/ all old debt liquidated on some ancient Aztec altar or other.

The EU is sans- output, it's too expensive with fuel @ $100+ per barrel and all EU countries importing from Ahmadinejad except Norway and Denmark.

Germany beggars its neighbors w/ 'Munn-ism' and some of that fading bondholder magic. What do the Germans sell? Waste enablers which accelerate the bankruptcy of users. For stylish waste the Europeans must fall ever deeper into debt.

Evans-Pritchard was more sensible when he was anti- euro without qualifications. He should simply wait, the world will become zero- euro without any help from him or anyone else.

Tunga's picture

for all we know we might not get tomorrow.


Grab some body sexy tell'em "Hey! Give me everything tonight!"

Instant Karma's picture

By and large the rating agencies have been asleep at the wheel for like, ever. Merely stating the obvious that some Soverign debt will likely not be repaid under current conditions (lagging the market by months/years) causes the EU to attack the rating agencies. Dudes, if you can't get these rating agencies to play ball with your worthless bonds they really are worthless. Can extend and pretend get any more surreal bizzare or just plain dumb? I thought the Europeans were the "hard money" crowd. They're tossing in the towel, like Japan and the USA. Buy gold.




Jesse's picture


Attempting to defend oneself against financial corruption, or daring to question the financiers judgement and motives, is clearly un-American and not to be tolerated.

fasTTcar's picture

Man, how I missed Ambrose.

Welcome back!

buzzsaw99's picture

Ratings agencies are criminal conspirators but the federal reserve system is da gawd fodder.

gwar5's picture

Central bankers calling the ratings agencies a cartel?  Sure, but look who's talking...

chump666's picture

What the hell is he going on about???  The EU/IMF and those crazies aty the ECB are the biggest cartel Europe has had since Communism.

The EU will collapse, pinning blame on the rating agencies? Funny...but those a-holes (EU/IMF/ECB) should look themselves in the mirror.  They boned their own financial 'intergrity' to protect French and German banks.  The rating agencies are now doing their jobs to protect the 'other' bond holders, yes it's beginning to feed on it's self but that is capitalism and capital markets for ya.

Solution for Europe.  Kick out Greece,Ireland (they WILL default), Portugal.  Restructuring of Italy and Spain.  The EZ would take the pain for 2ys, maybe less...

But the academics are timeing the EZ collapse with the China wipe out + US's fiscal emergency next 6mths = three-way orgy

Just look at the markets stuck in 6mth bid range...Total absolute cartel planning has supported assets, not the rating agencies, if anything they will help some hefty volatility creep in...till the whole thing just collapses.

Founders Keeper's picture

[The rating agencies are now doing their jobs to protect the 'other' bond holders, yes it's beginning to feed on it's self...]---chump666

Hi chump666.

This is what I look for in gauging the acceleration of the coming collapse---TBTF in-fighting, e.g. banks eating banks, sovereigns eating sovereigns, etc.


agrotera's picture

Hi Founders Keeper...

You are right...but I have found a little hope for game changers big enough to prevent the kind of collapse that you and I both know is in the works.

One big game changer would be a new U.S. president who would name the crimes of the financial(government sanctioned) cartel, then announce and take action with corrective measures.

See you later!

Agrotera (aka Pollyanna)

IBelieveInMagic's picture


On second thought, Bwahahahaha!

chump666's picture

And you'll get it...the rating agencies acting up now is a good sign.  Next is banks downgrading banks, Scandinavia saying no more to the PIIGS, the ECB facing a liquidity issue. Total implosion. 

Should heat up more coming months. 

Boston's picture

About six months ago, before he took a leave of absence, AEP argued that Spain---unlike many of the other PIIGS---would not need a bailout.

Now that the Spanish government bonds are starting to slip badly (the 10 year is breaking out of its 6 month wedge), I wonder if he'll change his mind.

chump666's picture

 his article makes no sense at all, as for Spain, they will NEED a bailout.  If Spain goes it will be Lehman x100, could KO the ECB.

EZ is still doomed though, ECB have lost their marbles

rambling on about rating agencies...bizarre, EZ is being destroyed from within.  Old Europe mentality ala communism, planned economies etc.

DosZap's picture

All propaganda.Who needs a rating agency, to state the obvious?.

Any fool knows these babies are going down.

It's a house of cards, and all that's propping them up is more fiat. When they start folding(default),you will not have time to get your houses in order,before the SHTF here.

The economy is totally tanked, and only criminal entities are profiteering.

Gubs are all in collusion, and milking this (us) for all they can before the grand Finale.

How do these countries continue to get bailed out, with worthless fiat, not possible.

A lucid dream.

Best get your house in order and fast.

Fed Pension's fund sucked dry, and the publics 401k's, and IRA's, are next on the hit list.

WilliamShatner's picture

AEP is great, he's been a semi-regular on David McAlvaney's weekly commentary/podcast.

Listen to him and read his articles all the time.


AbbeBrel's picture

No real surprise here ; basically the Stupid Germans appear to be continuing to act in character.   The only difference is that now they are acting stupid in the opposite direction.  Ref: The Big Short:

Why, for that matter, were Moody's and Standard & Poor's willing to bless 80 percent of a pool of dicey mortgage loans with the same triple-A rating they bestowed on the debts of the U.S. Treasury? Why didn't someone, anyone, inside Goldman Sachs stand up and say, "This is obscene. The rating agencies, the ultimate pricers of all these subprime mortgage loans, clearly do not understand the risk, and their idiocy is creating a recipe for catastrophe"? [...] If there were stupid Germans standing ready to buy U.S. subprime mortgage derivatives, Deutsche Bank should have been the first to find them.