ECB's Press Release On Portuguese Rating Threshold Suspension Until Further Notice

Tyler Durden's picture

7 July 2011 - ECB announces change in eligibility of debt instruments issued or guaranteed by the Portuguese government

The Governing Council of the European Central Bank (ECB) has decided to suspend the application of the minimum credit rating threshold in the collateral eligibility requirements for the purposes of the Eurosystem’s credit operations in the case of marketable debt instruments issued or guaranteed by the Portuguese government. This suspension will be maintained until further notice.

The Portuguese government has approved an economic and financial adjustment programme, which has been negotiated with the European Commission, in liaison with the ECB, and the International Monetary Fund. The Governing Council has assessed the programme and considers it to be appropriate. This positive assessment and the strong commitment of the Portuguese government to fully implement the programme are the basis, also from a risk management perspective, for the suspension announced herewith.

The suspension applies to all outstanding and new marketable debt instruments issued or guaranteed by the Portuguese government.


The farce continues...

In other news, rumors of euro's death have not been exaggerated one bit.

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Thorlyx's picture

We don't need no stinking ratings, bitchez...

Popo's picture

"In light of the fact that all of this Portuguese paper is apparently dogshit,  we have decided to solve the problem by lowering the requirements for Portuguese paper to dogshit.    There.  I fixed it."

Isn't central banking easy?

TheTmfreak's picture

Apparently anything they do (or don't do) is correct. Its easy when one defines success on makebelieve.

MarketTruth's picture

NINJA loans, once the domain of people, has now gone to countries as they can sell NINJA junk to the ECB.

midnight's picture

U.S. paper is the dogshit here. Very well polished by rating agencies, but still shit

RetiredSilverBug's picture

EU should protect itself in this financial war. Ignoring US rating agencies is a good start.

cossack55's picture

The US has rating agencies? Huh? Who woulda thunk.

eigenvalue's picture

Ignoring US rating agencies is not equal to ignoring the truth. The truth is that Portuguese bonds are junk no matter what ratings they have.

Urban Redneck's picture

But Portuguese debt was just as junk 72 hours ago as it is now.  There has been no material change in circumstances recently.  The relatively small spread in the sovereign repayment ability on the outstanding debt load (absent outright monetization/stealth default) between Portugal and the US also doesn't mirror the spread between AAA and junk.  So Moody's is playing politics WITH THE ECB??? They deserved to get bitch slapped, too bad the human rights ass clowns in Brussels and the Hague are too busy to look into their economic crimes against humanity.

InvalidID's picture

The problem with your thesis is that the US has options that Portugal doesn't. Like monetizing the debt.

 There is also the fact that the dollar is the WRC, meaning that people will flock to it in times of uncertainty. It's like name recognition. If Coke and Hanson's Natural had similar balance sheets you'd still place your bets on Coke's debt. Bigger, better recognized, more resources... I could go on and on, but I think you get the point.

Urban Redneck's picture

WRC is a quantifiable reality based on transaction settlements, but flight to safety is a relative perception based on a portfolio allocation.  Given USD weakness through MENA uprisings, Fukushima, et. al, the perception is shifting. 

The ability to directly monetize debt is a distinction between the ECB and FED, over the short term.  Central bankers, however, have a deep a bag of tricks on both sides of the pond and the statists behind the Euro want greater fiscal union within the Eurozone, which would inherently give the ECB monetization authority and balance sheet flexibility.

Right now Moody's is pushing a strong dollar/ weak euro agenda.  There was no material catalystfor the huge overnight reduction in ratings, when they get slapped down, they moved on to Belgium and skipped the sovereign and moved straight to the corporate, which they did start evaluating in March.  Technically, the downgrade could be justified within (barely) the criterion changes announced June 14, but it is somewhat of a stretch given the lending lifeline in Greece was extended, and Dexia's market access had not changed relative to similar market participants (before the downgrade - which becomes a self-fulfilling prophecy).  They would have had a much better case a week or two ago, but the strong dollar/ weak euro mantra was being chanted by the lemmings in light of the SPR manipulation and Greek uncertainty.

Getting back to the flight to safety.  Strong dollar/weak euro helps to diametrically opposed trades.  The traditional risk off/fear trade of dollars over other currencies, debt over equity, and short over long duration benefits US Treasury sales and refinancing.  However, a weak euro also benefits the exit and entry positions of a flight to safety (or diversification) out of the dollar and into the euro.  In short I think the big problem rig now is actually identifying big money's idea of the flight to safety.


AccreditedEYE's picture

Dude, are you smoking crack or am I not picking up on your sarcasm?

scratch_and_sniff's picture

Moody's came out a day before Portugal went to market and killed their rating, down 4 NOTCHES!, to JUNK, OVERNIGHT. What, they only realised on tuesday that Portugal was insolvent? They are incompetent, they have proved it time and again(other than the time they downgraded S&P), the ECB is right to take no notice... way too fishy to take seriously, lets hope the world pays attention and breaks the monopoly on credibility. How the fuck can any American agency downgrade anyone when they grade the US as AAA - when they are openly debating default?? (You got Rand Paul going for a filibuster, just because he owns a few million in gold and mining stocks...fuck that, Moodys is toast, I would short the shit out of it after today)

Rossalgondamer's picture

"...just because he owns a few million in gold and mining stocks..."

And there it is.

Setting aside our faceless crew of politicians. Some things are perceived to float in moments of pure panic - like just before drowning. Should we scold the prudent who jumped out early onto their steamer trunk? Should we blame the folks in steerage for charging the bridge and forcing a FSA run-aground?

Either way, Bon Voyage!

scratch_and_sniff's picture

No, just scold the fuckers who get caught kicking holes in the boat.

Rossalgondamer's picture

I believe I agree with you - but the problem to me rests with systems which reinforce the single large boat theory.

More numerous sloops - better distribute both the freight and potential for mass carnage.

AccreditedEYE's picture

Easy killer. When you look at what happened in Greece and extrapolate that to what will happen with the rest of the periphery, you need to let people know. Most investors in the know were expecting that downgrade anyway. (and more to come)

And your trying to tell me European politicians and bureaucrats DON'T act in their own interests? LOL Please bro.... have a scotch and take a few minutes to ponder that, then get back to me.

SheepDog-One's picture

Well, yes it IS a financial world war. Next always comes the actual shooting wars as the people starve to death and pillage and loot.

TheTmfreak's picture

If they made an alternate attempt to understand/evaluate risk and minimize it, than you're argument would make sense. Instead they are doing the plug the ears method and ignoring the obvious.

Highrev's picture

Absolutely correct.

It is a financial war, not doubt about it.

And would anyone suggest that Europe not defend itself?

And is there any doubt about who's attacking whom?

Or does anyone think that these are European agencies rating Europe? Have we cleared that up? Uh, where are the downgrades on the U.S. state and municipal levels? On the federal level? Are you rolling on the floor laughing yet?

What ZH readers are correct about is that this ends badly. Now it remains for those same readers to figure out who goes down first and who takes the biggest beating. I've said before that the odd-man-out will take the biggest beating. I've also asked if you know who the odd-man-out is?

InvalidID's picture

 Let's ponder the question of whom is attacking whom. Let's ask where this started.... Which bank was the first one under from the Debt Bubble? Anyone? Northern Rock was the first. Who had the largest share of bad debt per GDP and per capita? The UK. Who has attempted to stay really really quite during this whole mess? The UK?

 From my house it looks like the UK had no industry to speak of, no resources to speak of and decided it needed to make a buck somehow. Look into Gordon Brown and see what kinda bullshit he was peddling. Look at how Germany was all about it, until Northern Rock went under. Then German banks couldn't unload that dog shit paper fast enough.

 Now its a game of Limbo, who can get the lowest without falling. The Euro zone doesn't look like she's ready for that game, as you all can see several of her peripheral states are failing. Its a game the US is in a good position to win, and why shouldn't she? After the financial terrorism coming out of the Euro Zone it's lucky the US didn't declare WWIII and start whooping ass again.

Everybodys All American's picture

They had no choice ... otherwise the entirety of the ECB would be suddenly unemployed.

Thorlyx's picture

Now the guys at Moody's and co. will be unemployed.  You've got to make tough choices.

francis_sawyer's picture

So... does "Until Further Notice" mean its TRANSITORY?

Transitory Disinflation's picture

If we were living in the real world, the headline, which best describes the current financial situation would read: The end is near. We are in the middle of an economic financial meltdown. For Bilderberg high-financial managers the problem is how to postpone defaults for as long as possible“ and then to bail out, leaving governments (taxpayers) holding the bag, taking over the obligations of insolvent debtors. With overwhelming cross section of the worlds population against it, the trick is to override democratic politics.

As Bilderberg agrees, for this to happen, economic policy must be transferred from elected government bodies to those of financial planners,making the economy entirely dependent on them, with public borrowing creating an enormous risk-free market for interest-bearing loans. This explains what George Ball, the then Under-secretary for Economic Affairs with JFK and Johnson said back in 1968, at a Bilderberg meeting in Canada: Where does one find a legitimate base for the power of corporate management to make decisions that can profoundly affect the economic life of nations to whose governments they have only limited responsibility?

This is how financial oligarchy replaces democracy. The role of the European Central Bank, IMF, the World Bank, Bank of International Settlement, the Federal Reserve and other financial oversight agencies has been to make sure that bankers got paid.

The problem with today´s system is that the world is run by monetary systems, not by national credit systems. If you are smart, you don´t want a monetary system to run the world. You want sovereign nation-states to have their own credit systems, which is the system of their currency. Above all, the possibility of productive, non-inflationary credit creation by the state, which is firmly stated in the US Constitution, was excluded by Maastrich as a method of determining of economic and financial policy.

Now, in Europe, that can´t be done because in Europe, the governments are subject to control by private banking interests, called independent banking systems, which is blocked constitutionally from creating credit for governments. These institutions have the power to regulate government, and to dictate terms to government. Think about this institution within this European edifice called ECB. It tries to function like a European independent central bank, which has no government.

There is no government. There is no nation. It´s a group of nations run by a private bank.

The supposed independence of the Central Bank is the decisive control mechanism for private financial interests, which historically in Europe has been installed as an authoritative instrument against an economic policy of sovereign governments oriented towards the General Welfare. European banking is a remnant of a feudal society, in which private interests“ as typified by ancient venetian cartels or by the Lombard league which went down in the Dark Age in the 14th century.



By Daniel Estulin of

Rossalgondamer's picture

And the democratic trick of politics is - Fear, Fiat money and Taxation.


Strip these - and we may honestly speak on sovereign dignity, peace, and prosperity.

Ghordius's picture

So if we prefer default risk to money printing inflation we are ancient feudalist?

Enjoy your way

TheTmfreak's picture

They should have just said the Euro is transitory.

eigenvalue's picture

But the Euro and equities are higher on this news so mission accomplished.

Coke and Hookers's picture

The ECB would gladly use human excrement as collateral for credit to save the euro. Just anything to save the dream. There should be plenty of collateral available since the entire EU elite is shitting their pants now.

LetThemEatRand's picture

I also hear that human pubis is in demand in some European markets.

cossack55's picture

Hell, my house should be worth at least 110 billion euros. Can I buy Austria?

SilverRhino's picture

No Flounder, but you can have these 10,000 marbles.

molecool's picture

Funny how the inconvenient truth simply gets ignored. What a freak show...

Curtis LeMay's picture

Well said.

Shit's surreal, ain't it?

It's like we are living in some parallel universe where the laws of physics and economics simply do not apply.

We can no longer overlook the fact that the puppetmasters taking us to this "new world" are along the way destroying the real one we all live in...

francis_sawyer's picture

"Convenient Lies" is the new documentary we're working on...

SheepDog-One's picture

Same phrases coming next to a Bernank speech soon no doubt!

inkarri9's picture

So by that logic, why not throw out credit scores for the little guys as well so that everyone can buy a house again and the party can continue.

alien-IQ's picture

wouldn't it be nice if those rules applied to all of us?

just imagine:

YOU: I'd like to take a 250K personal loan please.

BANKER: Do you have any collateral?

YOU: Yes. I have this hamster.

BANKER: Excellent. You are approved.

wandstrasse's picture

may I say that, within this context, you do insult hamsters.

alien-IQ's picture

No hamsters were harmed in the scripting of that post. Any resemblance to actual hamsters, living or dead, is purely coincidental.

wandstrasse's picture

ok ok but don't you think that your post could encourage people to offer their hamsters to ruthless bankers?

equity_momo's picture

The freakoids who run the banking system enjoy sticking hamsters and other rodent like creatures into tubes that are inserted into their anus.  You'll have to lower your collateral quality if you want to draw a parallel with this. Something they would never ever find use for , like a fucking CLUE.

Offer to give them a clue in exchange for 250k.

francis_sawyer's picture

YOU: I'd like to take a 250K personal loan please.

BANKER: Do you have any collateral?

YOU: Yes. I have this hamster.

BANKER: Excellent. You are approved... Now kindly take the hamsters place on the wheel, and don't get off until I tell you...


There... fixed it...


hugovanderbubble's picture

IF hedge funds doesnt appear, to short this farce, i will never ever more will buy any hedge fund in my f.g life.

MachoMan's picture

Weren't there numerous previous articles essentially explaining that the reason vigilantes haven't shown up is because they're up against a printing press?  Essentially, they can come in and donate for a short covering rally some more...  or sit back and front run/take scraps from the machine...  which do you think is more likely?

earnulf's picture

So the newest rating agency is the GCECB (which doesn't make for a good acronym in any language).   Guess Europe found thier "rating" agency that they were looking for.

Next up, Greece Debt is AAA as is Ireland, Italy..etc

Everybodys All American's picture

So if the US ever loses their AAA rating all we have to do is ignore it? Problem solved.