The End of Sovereign AAA?
Fitch "ups the rhetoric" in the continuing assault on sovereign AAA. Today Spain, the United Kingdom and France are on the chopping block. Though the report, "Unpleasant Fiscal Arithmetic for Sovereigns in '10" addresses some of the most looming issues for the sovereigns, it is hard to see any of the ratings agencies as more than reporting entities, rather than predictive ones.
Major ‘AAA’ sovereign governments need to articulate more credible and stronger fiscal consolidation plans during the course of 2010 to underpin confidence in the sustainability of public finances over the medium term and the commitment to low and stable inflation, according to Fitch Ratings in its Sovereign Outlook report. The capacity to finance large budget deficits over a prolonged period without financing stress is not in itself sufficient to preserve ‘AAA’ status.
Released before a long holiday weekend? Too little too late? Not a strong case for "truth to power" courage from the big "F".