One Minute Macro Update - Surprise, Surprise: Another Cut for Portugal

Tyler Durden's picture

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CPL's picture

Cuts!  Cuts for Everyone!!!



SheepDog-One's picture

Step right up, pensioners! Get ya hot fresh CUTS right here dont be shy, get in line!

Zina's picture

Eeerr... Not for everyone. Yesterday, Fitch just RAISED the rating of Brazil from BBB- to BBB.

And the Brazilian government didn't like the measure, because it means more speculative capital entering Brazil, more dollars, more euros, what will drive up the Brazilian currency (Real), and an overvalued currency is a curse.

Robot Traders Mom's picture

Its absolutely amazing to me investment firms still have ratings guidelines on their ADV's considering what is considered 'investment grade' these days...


CPL's picture

Don't even get me started on that.  Moody's and their ilk have the same weight as a 50+ cracked out, two dollar dock hooker.


Urban Redneck's picture

So a US rating agency that has somehow managed to avoid the Arthur Anderson treatment uses its "trusted" magic eraser to wipe liquidity from EU credit markets?  Trichet and his hapless cohorts have had over three years to devlop alternative European rating agencies.   

magpie's picture

Yes, maybe something like changing ratings on US states and municipalities several times a month.

The national US rating will of course remain untouched, just to maintain friendly appearances and cause some general hilarity.

Caviar Emptor's picture

Someone proved that deficits don't matter. So why the cuts? 

Josephine29's picture

I guess the Portuguese situation will run and run as it has no government until the June 5th elections. However even the European Central Bank seems to be tiring of backing it up according to Notayesmanseconomics.

One clear corollary of this is that the ECB has created a “false market” in Portuguese government debt. It appears to have forgotten that central banks are supposed to stop false markets rather than create them! I notice that the Dutch central bank governor now appears to agree with me as according to Het Financieele Dagblad he said this.

We are buying paper from banks, from the private sector, and from governments. That is not what we are on earth for. If things turn bad the value decline is for our account.


Miss Expectations's picture

During a speech yesterday, Fed Chairman Ben Bernank described the U.S.’s current level of inflation as “transitory.”

Wizard of Oz:  "I can't come back, I don't know how it works!  Goodbye everybody."



Who really gives a rats ass what a credit rating agency has to say? Remember a credit rating agency's credit rating merely represents "journalistic opinion".

How these "journalistic opinions" can drive an entire industry, but not represent any legal liability for the agency when they fuck up, is beyond me.

Urban Redneck's picture

The arbitrary rating determines the available leverage which underlies the entire fractional reserve banking system.  Theoretically, if all the ratings agencies were to downgrade US debt to junk today, then every US bank would instantly be woefully undercapitalized/insolvent and need to either 1) to massively reduce outstanding loans, or 2) take on massive amounts of Ben’s funny money instead of Timmy’s IOUs to restore the their capital bases.  That’s too much power in the hands of an unelected and unaccountable small group.

overmedicatedundersexed's picture

gotta keep the FRN strong..good by euro hello

gold moving up this AM??

ivana's picture

This is just a foreplay. Before FED starts tightening all others (EU, PIIGS etc) must be down in flames.

ECB and Trichet will, of course, act as fist level of bankster utilities facilitating interest rate rise.

BennyBoy's picture

Aren't the guys demanding higher interest rates the same guys increasing the spread?

Kind of like front running. But legal.

thames222's picture

Portugal, why are you so shady and so incompetent?  Your people must be lazy, although you're only following our example.  Why does everybody feel so sorry for these people?