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Fitch Revises Belgium Outlook To Negative
Two weeks ago we speculated that S&P would downgrade Belgium next as the peripheral fire makes inroads to the core. Turns out Fitch is taking charge on this one. Expect S&P to follow shortly. EUR for now pretending it doesn't care.
FITCH REVISES BELGIUM'S OUTLOOK TO NEGATIVE; AFFIRMS AT 'AA+'
Fitch Ratings-London-23 May 2011: Fitch Ratings has revised Belgium's rating Outlook to Negative from Stable and affirmed its Long-term foreign and local currency Issuer Default Ratings (IDRs) at 'AA+'. Fitch has simultaneously affirmed Belgium's Short-term rating of 'F1+' and Country Ceiling of 'AAA'.
"The Negative Outlook reflects Fitch's concerns over the pace of structural reform in the coming years and the ability to accelerate fiscal consolidation without a resolution to the constitutional crisis," says Douglas Renwick, Director in Fitch's Sovereign group. "However, despite the ongoing political dispute, day-to-day fiscal management has remained strong, in keeping with Belgium's high-grade rating."
In Fitch's view, without political agreement over constitutional reform, it will be difficult to achieve a balanced budget at general government level as laid out in Belgium's Stability Programme. This would require budgetary surplus at lower levels of government and/or significant social security reform, either of which would likely become entangled in Belgium's linguistic-community dispute.
Sustained debt reduction will require fiscal reform as well as fiscal discipline over the coming years, which in turn requires a new government with a fresh mandate.
Political risk is higher in Belgium than in other euro-area peers given the fractious disputes over the future shape of the state. Fitch notes, however, that the caretaker government (in place since April 2010) has significant budgetary powers and the agency does not expect the political turmoil to pose a threat to fiscal performance this year (a deficit of 3.6% of GDP is budgeted for 2011). Belgium's deficit outturn for 2010 (4.1% of GDP) was better than expected and stabilisation of debt/GDP has been achieved, in contrast to with most euro area peers.
However, the high level of public debt (96.6% of GDP in 2010) leaves the government with little spare fiscal capacity to deal with future shocks. This makes the rating sensitive to risks surrounding the government's medium-term fiscal objectives, which Fitch views as significant. Slippage from official deficit targets would likely result in a downgrade.
Despite a relatively solid economic performance through the crisis to date, Fitch notes some factors which could hinder growth over the long term. The labour market has significant rigidities, with limited responsiveness of wages to productivity. Product market regulation is also significant. Belgium's banking system was hard hit by the crisis and has required substantial state support (the upfront cost of bank bailouts has added around 6% of GDP to the public debt). Banks' domestic exposures are relatively low risk but claims on peripheral euro area and CEE entities are significant.
The 'AA+' rating is underpinned by Belgium's structural strengths: an advanced, diversified economy with high income per capita, high domestic savings and low private sector debt. The economy's external balance sheet is strong, with relatively low international leverage, current account surplus and a net foreign asset position. All these are characteristics of a "core" euro area sovereign.
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AA+. Call me when they stop lying.
The raw power of chocolate.
Ok, what does it all mean
Simple. You know how girls look better when you are a little tipsy?
Fitch just drank a fifth of Everclear when it looked at Belgium.
When the fuck was the outlook on Belgium ever positive?
Although I heard that the German / Dutch part actually works pretty hard. It's the sucky halfbreed mongrel French part that's dragging the whole ship down.
I....
We...
They....
WE ARE NOT TAKING ANY QUESTION FOR NOW! THIS INTERVIEW IS OVER!
Buy the rumor, buy the news. That's how the old saying goes, right? Bob Pisani? Ok, just makin sure. BTFD!
Is it just me ..or is all this news in the EURO zone starting to become a comedy...
More Eurozone symbolism comedy of the day- Obamas limo gets high centered dead stuck.
YouTube - Barack gets car stuck at Dublin Embassy May 23rd 2011
Looks a bit like a replay of last year, only worse. Will investors flock to the Dollar this time around?
http://silvercointrader.com/2011/05/will-investors-flee-to-the-us-dollar-if-the-euro-crashes/
Only a WEE bit more negative than 100% safe great investment.....uh yea.
What is amazing is the continued surge in CMG, (a freaking burrito restaurant!!!), making new highs and totally shucking off all the various and assorted ills plaguing the financial markets these days.
And don't get me started on American Express, Capital One, Discover, etc. as safe haven plays....
LOL...
Hard to imagine ZH actually compensates you in some way...
There's always money in the burrito stand
Mexican restaurants are performing better than both silver and gold this year.
YUM is also pretty good...
No wonder ... as they say: You can't eat gold (or silver for that matter).
TZOO down. But momo, you promised! lol
is today the day we're supposed to fight the fed according to the old catfish mouth, or not? the girl can't keep his stories / lies / exaggerations straight from blog to blog, day to day or post to post, although the biggest lie is the one he tells to himself which is that he is a trader par excellence.
Ok we won't we promise!!!......if you promise to stop cherry picking from past performance
What is amazing is the continued surge in CMG, (a freaking burrito restaurant!!!),
This is obviously the result of that secret meeting in the Eccles building last weekend. The first target for QE3 has been chosen!
They should grade everyone on a curve, that way everything is always fine.
Is it just me or does the DXY tank about 15-20 ticks every day lately around 11 or 12pm? And then the market starts its upward ascent. Can't remember the last time we've shown consistent strength in the DXY into the close for more than a day at a time. Never, ever any downward confirmation. We'll see what happens today...
I've noticed movement around that time LRC -- but haven't gone too far back (i.e. no more than 3 months) to check for patterns. But yeah, I have noticed some pretty consistant movement at certain times of the day.
EDIT: Damn text editor. Tyler, can we puhlease get the captcha thing fixed? It regularly asks for answers that are negative but does not allow the "-" to be placed in front of the answer. OT rant off. ;)
Whoops there goes another rubber tree plant!
(European fires now jumping roofs. Worldwide QE3 by July 1. No way pain will be taken here.)
Bernanke will now have to choose between people having jobs and their having enough money to pay the gas to get there. Until Congress repeals dual mandate, we know what he will choose.
Hi. I'm a long time ZeroHedge follower.
Come follow my financial chart blog at http://deadcatbouncing.blogspot.com/ and see just how wrong someone can consistently be ;)
As I posted elsewhere where you've put this ...
That is an absolutely disgusting perverted name for your blog ... humour about the sufferings and death of animals, is about as low as it gets.
Please do not show that sick-named link of yours again.
In Fitch's view, without political agreement over constitutional reform, it will be difficult to achieve a balanced budget at general government level as laid out in Belgium's Stability Programme. This would require budgetary surplus at lower levels of government and/or significant social security reform, either of which would likely become entangled in Belgium's linguistic-community dispute.
...and if the market wasn't already constantly baking-in the assumption that half of Belgium's population could die of boredom at any given moment, this downgrade would be a much bigger deal.
When is someone going to notice italy or france or the US for that matter?
Germany's outlook gets lowered in the next 12 months. That will be the "tilt" signal. France soon after. Nothing less will get real action from the core.
Thats where all this is going just a little slow getting there.
'Belgium' is a swear word. http://www.charleroiadventure.com/
For some reason your link is broken. Here it is again.
Charleroi sounds like some place you'd visit either before or after your tour of Chernobyl.
It's the place where the Belches hide the abducted children.
Belgium is the forgotten PIIG.
Host of the EU headquarters is never mentioned as a PIIG, but it's really BPIIG. They're in bad shape too and also have no government so they're in suspended animation. Belgium is complete lunacy, but the EU has no shame.
The Dutch part in the North is pissed that the Frenchie part in the South are freeloading mooches who don't contribute.
Dontcha know the Northern half is supposed to pay for everything and keep the chic French leaning Southerner's social welfare benefits up to date with inflation.
Apparently, it's called "Going Dutch" for good damn reason.
belgium is one of the biggest creditor nations / capita in Europe. Just look it up in CIA factbook if you think im BSing.
Often forgotten to take the NET balance.
Just like Belgians own a shitload of foreign assets, they own the majority of their own sovereign debt.
This is why the majority will never get it that Belgium (similar situation as Japan concerning being NET creditor and majority holder of sovereign debt) is correctly forgotten as a PIIG country
Before commenting, think about how small the importance of ratio debt/gdp actually is compared to other factors.
Take the U.S, if you take all factors combined, you know theyre in a huge mess, no parallel to be found in europe.
I do not deny, however, that the future looks bleak, very bleak. - A 'Belgian'.
Furthermore, I don't like the idea of central rating agencies (see also david einhorn charlie rose interview YT).
However, to me it looks easy to criticise their opinions from an amateur point of view.
Has anyone considered they might be bigger experts in their field then this plebs army of Debt/gdp and 'latest news readers'?
But that trick only works if you have your own currency, right?
Now would be a good time for King Albert II to show the advantages of constitutional Monarchy and send some heavily armed members of the military to invite the heads of all the major parties to the "castle" of Saint-Gilles,close the large iron gates behind them and tell them they may leave when the country has a government.
Once their patent for "the Belgian Waffle" ran out, I knew they were sunk.
FREE FLANDERS!
FREE FLANDERS!
FREE FLANDERS!
Vlaanderen vrij!
Vlaanderen vrij!
Vlaanderen vrij!
The tjseven are not trustable, the socialists think they're living in a 'free' 'gratis' world and a fucking liberal like bart Tommelein wants to sell the physical gold. Good luck !
Even Prof. Dr. Paul de Grauwe of the K.U.Leuven things the financial/bank crisis is probably caused by the rating offices like Fitsch etc... At the time he was just a professor, he was a good one. Later he became a politician and TV star. Now he's telling bullshit.
In Flanders they used to say : good friends make good accounts. Do we have good accounts ?
Even Prof. Dr. Paul de Grauwe of the K.U.Leuven things the financial/bank crisis is probably caused by the rating offices like Fitsch etc... At the time he was just a professor, he was a good one. Later he became a politician and TV star. Now he's telling bullshit.
In Flanders they used to say : good friends make good accounts. Do we have good accounts ?
Reynders said it even better this week: THE BELGIAN DEFICIT IS A URBAN LEGEND!
They better make him head of the ECB... wouldn't that be fun...
This is getting better by the day. I'm going to need more beer, popcorn, and nuke pics for this crash. 2008 was a piker compared to what is coming next.