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Moody's Downgrades Greece To A2, Keeps It Two Notches Above S&P And Fitch, Prostitutes Itself Again
The rating agency that has gotten selling out down to an art, just downgraded Greece from A1 to A2, yet kept it two notches higher than where the country is now fairly rated by Fitch and S&P, thereby preventing the country from collapsing into a liquidity crisis. By taking this action, Moody's has once again proven its utter worthlessness, by pretending to be objective while at the same time keeping an artificially inflated rating high enough to prevent the unforeseen spillover effects from Greece's inability to use Treasury's as ECB collateral: the definitive first domino to fall in Europe, about which we wrote 3 days ago.
Full Moody's ridicule script:
Moody's downgrades Greece to A2 from A1
Moody's Investors Service has today downgraded Greece's government
bond ratings to A2 from A1. Today's rating action concludes
the review for possible downgrade initiated by Moody's on 29 October
2009. The outlook is negative.
This rating action does not affect the ratings of Greece's country
ceilings for bonds and bank deposits, which remain Aaa (like the
rest of the Eurozone).
"Greece's repositioned rating of A2 balances the Greek government's
very limited short-term liquidity risks on the one hand,
and its medium- to long-term solvency risks on the other,"
says Sarah Carlson, Moody's lead sovereign analyst for Greece.
Moody's notes that the country's longer-term risks
have only partly been offset by the government's announced policy
response.
Moody's had initiated its review of Greece's A1 sovereign rating
in response to mounting evidence that the government's long-term
credit strength was eroding materially. In particular, the
rating agency intended to assess the new government's policy intentions
and its room for manoeuvre.
"Moody's believes that Greece is extremely unlikely to face
short-term liquidity/refinancing problems unless the European Central
Bank decides to take the unusual step of making the sovereign debt of
a member state ineligible as collateral for bank repurchase operations
-- a risk that we consider very remote," says Arnaud
Marès, Senior Vice President in Moody's Sovereign Risk
Group.
Well, you know what they say one must do with any piece of paper that has the words "Moody's believes" on it...
Moreover, as evidenced by other support operations within the EU,
Moody's indicated that there are potentially other means to mobilize emergency
liquidity funding should it be required -- but Moody's does
not believe that this will be necessary.
And again. For those who need a refresh, flashback to 2007 and this pearl: "Moody's does not believe that housing will pose a significant risk." Oh really now...
Moody's also does not believe that the Greek government's
difficulties represent a vital test for the future of the eurozone,
but rather a repricing of relative risks that had been concealed by years
of abundant global liquidity and somewhat above-potential growth.
That's three times Moody's has said believe. Quite appropriate, two days before Christmas (yes, had it been Easter the irony would be supreme).
"The Greek government's credit challenges are of a longer-term
nature," explains Ms. Carlson. "They stem
from a slow erosion in competitiveness and economic potential, which
implies that the government's debt problem cannot be resolved by
growth alone. They also result from chronically weak fiscal institutions,
which cast a shadow over the government's ability to implement decisive
fiscal retrenchment in order to restore debt sustainability."
Furthermore, the combination of a global post-crisis environment
that is less favourable to Greek public finance dynamics (with increased
risk discrimination and muted global demand) and an equally challenging
domestic environment (with accelerating demographic pressure on public
finances in coming years) will make any fiscal adjustment increasingly
difficult and costly to postpone. However, Moody's continues
to think that a migration of liabilities from the banks' balance sheets
to that of the sovereign is unlikely.
Moody's acknowledges that last week's announcements by the
Greek government clearly identify these weaknesses and pave the way for
a lasting solution. However, the long-term credit
standing of Greece will depend on the Greek population's acceptance
of these measures and the government's vigorous implementation of
them. "As neither of these can be taken for granted,
and because these measures will also take time to bear fruit, Moody's
has placed a negative outlook on the Greek government's new A2 rating,"
says Ms. Carlson.
At A2, Greece's bond rating compares with those of other high-income
but highly indebted countries that do not face external payment vulnerabilities.
However, the rating is positioned well below those of Belgium,
Ireland or Italy (which are rated at Aa1-Aa2) to reflect Greece's
poor track record in terms of real fiscal adjustment. Greece's
rating also remains higher than Baa-rated Mexico, Brazil
or Hungary, all of which have better or similar debt metrics but
much lower income levels. These countries also do not benefit from
the protection against external payment crises afforded by Greece's
membership in the European Monetary Union.
Looking ahead, the question of whether the negative outlook will
evolve into a stable outlook or into a further downgrade will depend on
the Greek government's plan being followed through -- as demonstrated
for instance by a sustained increase in tax revenues and/or the effectiveness
in reining-in expenditure.
And if all else makes perfect sense, even if it is in bizaro world, but that last paragraph is simply a killer. What world do these "analysts" live on?
Moody's last rating action with respect to the government of Greece was
on October 29, 2009, when its A1 long-term debt ratings
were placed on review for possible downgrade.
Once again the direct hotline straight to the cheap hooker suite at 7 World Trade Center does not disappoint. Today Trichet, tomorrow whoever is the next in dire need of "condoming" the most recent iteration of extend and pretend (if you get syphilis after rating agency rape and nobody sees your nose fall off, did you ever get a case of rating agency syphilis?). How Buffett is still involved in this garbage enterprise is beyond us. At least with an army of disgruntled Deep Shahs running around Moody's offices, one can be certain that at least several hedge funds found a way to make some serious money out of this latest piece of "news" from Moody's.
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Deja vu over and over again. One day this BS isn't going to work for the powers that be. And I for one will be happy.
[dup]
After Moody's arrived as a tenant in our floor (back then) it was impossible to find a free bay in the common restroom area. Often there was a queue. From then my take on Moody's is that they produce a lot of shit.
The anal-list were making their daily insider calls/text messages and sniffing the powder.
Deep Shah.
If the USDA stamped a slab of mad-cow infected beef "AAA", would that prevent the one who eats the meat from having the inside of his brain eventually resembling a sponge?
Artificial life support will soon follow. The outcome is quite predictable.
For such theatrics, I don't even know why would the ECB depend on those agencies. why would anybody on the whole world would depend on their ratings for that matter is beyond me. I think those beraucrats are behind the curve. Their games are pretty much well known by now.They don't need to pretend anymore. All they have to do is just come out and say,we will accept any garbage as collateral,untill all soverigns goes bankrupt....
This kind of crap will just lead to an "unorderly" unwind.
Do any of you wonder why the ratings agencies haven't been charged for fraud in the mbs cdo ratings crimes ?. Now you know why. In return for not pursuing fraud or Rico statute charges the agreement is for them to continue rating everything 2 steps over sunshine ..
Corruption knows no limit when the msm is yours..
Nikki. Revolution calling you...
Some people reach zero faster than others.
do people still pay attention to moody's? they say the uS of Z is Aaa, u believe that?
You cannot beat the establishment . All your efforts are in vain. The doom scenario never works. Then you join them.
Guys, I know you're short, but you have to adjust your heads. You're hoping for people to die. If there are riots in the streets, people will die, and probably in appreciable numbers. It's not a clean, comfortable transition of people from one configuration to another that happens to raise your portfolios.
It's people throwing rocks and molotov cocktails in the street and with all that rampant violence, someone will get killed. Then someone else. And someone else.
A rating agency that wants to bias their views to prevent that is not evil.
stercus accidit.....
Ironically, the lack of a meaningful downgrade from Moodies (sp intentional) might not sit well with others that have sovereign debt issues of greater magnitude.
Let's face it... the EU has recognized Greece as a "sub-performing", deficit-laden government for over the past decade. Don't you think they knew that a 10% deficit to GDP was coming from a mile away? And don't you think that the EU had a "plan" for Greece all along?
Sure, we'll see a degree of tough talk from the Eurozone. But the fact of the matter is that Greece is a blip on the map, and will be induced "tough medicine" in exchange for a "bridge" from EU nations running at or below the 3% deficit threshold (it may only be Germany, for all I know).
No, the real battleground for sovereign debt will be the U.K., and the good 'ol USA, where fundamentals point to potential downgrades-- and nobody will be there to backstop the deterioration.
While there is the possiblity of collateral damage from this sovereign debt panic, Greece is seriously a diversion. The EU is frankly more concerned about backstopping the Austrian banks-- and rightly so, given the links to the rest of Eastern Europe.
The points about Moodies is right on the mark, though.
No, the real battleground is to "advance" someone in the euro area right in front of U.K. and the good 'ol USA sovereign credit-and-otherwise right now.
Agree. Greece just jumped in front of California in the “sovereign CDS market« competition. Heh. Mission accomplished. Let u($)s rally just as fibobozo/elliotolikes predicted here on zh.
(and stuff more turds on ECB)
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