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Tomorrow Is The 6 Month Anniversary Of S&P's Threat To Downgrade Belgium "Within 6 Months"

Tyler Durden's picture


While everyone is focusing on the by now default (pardon the pun) assumption that Greece will default, it may be time to redirect attention to the core of the Eurozone, where tomorrow will mark the 6 month anniversary of S&P's threat that it will downgrade a still government-less and AA+ rated Belgium. From December 14: "If Belgium fails to form a government soon, a downgrade could occur, potentially within six months." Newsflash, at least for S&P which appears to need reminding of what garbage it has published in the recent past: tomorrow is the 6 month anniversary of this report. And the conditions for the downgrade are still there. So instead of continuing the "high and mighty" charade with now weekly downgrades of Greece, perhaps it is time to really throw the Eurozone in a loop and remind the world that the line between the PIIGS and the "developed" nations is relaly non-existent.

And in other worthless news, the San Fran Fed has just burned through more thousands of dollars to come up with the brilliant conclusion that according to the Taylor rule peripheral and core Eurozone countries deserve different interest rates.

Figure 3 compares the paths of rates recommended by the Taylor rule for the euro area’s core and periphery with the actual ECB policy target rate. As noted earlier, the ECB’s actual target rate seems to be in line with the Taylor rule recommendation for the euro area as a whole. But things look very different when the Taylor rule is applied separately to the euro area’s core and periphery. The policy target rate recommended by the Taylor rule for the peripheral countries remains negative. The ECB’s actual policy rate is well above the rate recommended by the Taylor rule for the periphery, but below the Taylor rule recommendation for the core. This is not surprising. The core countries are well along the path of economic recovery. But the peripheral countries are still struggling to recover from the sovereign debt crisis. They are implementing a range of reforms and fiscal adjustments, which have impeded overall economic recovery (see Nechio 2011). It is uncertain whether the peripheral countries will be able to grow fast enough to generate the income they need to service their sovereign debt obligations. Increases in interest rates may make reaching such growth levels even more challenging.

Strikingly, Figure 3 shows that a divergence between the ECB’s actual target rate and the rate recommended by the Taylor rule for the peripheral countries is not new, but has reversed itself. Before the 2008 crisis, the ECB target rate lay below the level predicted by the Taylor rule for the peripheral countries. In fact, from the inception of the euro to the 2008 financial crisis, the actual ECB policy rate was below the rate predicted by the Taylor rule for the peripheral countries and more in line with Taylor rule recommendations for the core euro-area countries. During the financial crisis in 2008, the peripheral countries fell into deep recession, which was followed by a debt crisis from which they have yet to recover. By contrast, recovery in the euro-area core has been more robust. These events reversed the historic pattern and positioned the ECB policy rate above the Taylor rule recommendation for the peripheral countries.

When members of a monetary union are experiencing different macroeconomic conditions, a single policy rate is unlikely to fit circumstances in all countries. Currently, the ECB’s target rate seems to be in line with a Taylor rule recommendation for the euro area as a whole. However, economic differences between peripheral and core euro-area countries are sharp. The core countries are recovering, while the peripheral countries still have large unemployment gaps. Thus, the ECB target rate is not in line with Taylor rule recommendations for the peripheral countries.

Yes: this is the quality of content US taxpayers get in exchange for giving the Fed the privilege to print infinite amounts of paper on a whim.



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Mon, 06/13/2011 - 14:58 | 1365491 plocequ1
plocequ1's picture

Moody blues  bitchezz

Mon, 06/13/2011 - 15:59 | 1365654 ratso
ratso's picture

Good music for watching a slow moving Belgian train wreck.

It's only a matter of time until Belgium splits.  Then the question is who will pay the tab from the past. I can just see them fighting over the bill in their patriotic fervor to do the right thing - not.

Mon, 06/13/2011 - 14:56 | 1365492 Temporalist
Temporalist's picture

No government?  What a strange idea.  Who will take care of them? 

Mon, 06/13/2011 - 15:05 | 1365529 Conrad Murray
Conrad Murray's picture

Belgium has the right idea. Today's governments are merely tools of the elites used to enslave nations. Let the banksters rot in piles of their own AAA excrement. Tomorrow is flag day. Tomorrow is the beginning of #opESR. Burn a flag, burn an effigy of your favorite pigmen.

Mon, 06/13/2011 - 16:23 | 1365694 Reptil
Reptil's picture

I disagree. The same was said by my belgian friends.

There IS a government, they just didn't vote for it.

I think Belgium will be split up in the next decade. The northern people (Vlemings - Vlamingen) are going an opposite direction as the south (Wallonians - Wallons). They have a different language, different ideas, and are economically on a different course.

Mon, 06/13/2011 - 15:34 | 1365589 The spam fritter
The spam fritter's picture

We still have a few in the regions and they are still taking taxes........

Mon, 06/13/2011 - 15:55 | 1365647 falak pema
falak pema's picture

Von Rompuy! the eternal Bilderberger designed belgian round about.

Mon, 06/13/2011 - 16:17 | 1365674 macholatte
macholatte's picture

Is no government Belgium's version of Austerity? Are the people thriving?

Maybe Greece should try it. Maybe everyone should.


If someone from Holland is Dutch, and someone from Deutchland is German, then is a person from Belgium a Belch?

Just asking.

Mon, 06/13/2011 - 17:55 | 1365718 Reptil
Reptil's picture

Belg, or Belge, depending where you are.

Thriving? They're so used to corruption and incompetence and OTOH the "grandeur" of the ruling class that they're ok. They live their lives. But it's not really a coherent country, like France, or Portugal even. It's a collection of somewhat different areas.

One time I was trying to access an ATM in the centre of Brussels. This was in the daytime, normal working day. It took me half an hour, because they only activated one of the 5 machines there. They don't give a fuck, money has been coming in through the EU anyway. Lots of expensive cars (Porsches, Range Rovers) too, but no money to fix the potholes in the highway.

Still... the women have class and the beer is amongst the best in the world.


Mon, 06/13/2011 - 15:03 | 1365496 Franken_Stein
Franken_Stein's picture


Long llive the Taylor Rule !

What would we be without it ?

Only a shadow of ourselves.


If you're going to San Fran Cisco.

Happy people with flowers in their hair !


All across the natiooon !

There's a strange vibratioooon.

People in motion, PEOPLE IN MOTION !


There's a WHOLE generation.

With a new explanatioooon !


Mon, 06/13/2011 - 15:25 | 1365570 carbonmutant
carbonmutant's picture

Granola crowd...

Mon, 06/13/2011 - 15:33 | 1365586 WALLST8MY8BALL
WALLST8MY8BALL's picture

What's there to live for

Who needs the Peace Corp

I think I'll just drop out

Ill go to Frisco buy a wig and sleep on Owsley's floor

Walked past the wig store.

Danced at the Filmore

I'm completely stoned

I'm hippy & I'm trippy

I'm a gypsy on my own

I'll stay a week & get the crabs &

Take a bus back home

I'm really just a phony

But forgive me

'Cause I'm stoned

Mon, 06/13/2011 - 15:38 | 1365606 Franken_Stein
Franken_Stein's picture



You blinded me with poetry.


Mon, 06/13/2011 - 16:44 | 1365733 TheFourthStooge-ing
TheFourthStooge-ing's picture

Hey Punk, where you goin' with that flower in your hand?

Hey Punk, where you goin' with that flower in your hand?

Well, I'm goin' up to Frisco to join a psychedelic band.

I'm goin' up to Frisco to join a psychedelic band.


Hey Punk, where you goin' with that button on your shirt?

Hey Punk, where you goin' with that button on your shirt?

I'm goin' to the love-in to sit and play my bongos in the dirt.

Yes I'm goin' to the love-in to sit and play my bongos in the dirt.


Hey Punk, where you goin' with that hair on your head?

Hey Punk, where you goin' with that hair on your head?

I'm goin' to the dance to get some action, then I'm goin' home to bed.

I'm goin' to the dance to get some action, then I'm goin' home to bed.


Hey Punk, where you goin' with those beads around your neck?

Hey Punk, where you goin' with those beads around your neck?

I'm goin' to the shrink so he can help me be a nervous wreck...


Mon, 06/13/2011 - 15:00 | 1365504 GeneMarchbanks
GeneMarchbanks's picture

Maybe the rating agencies are realizing that somebody needs to be rated AAA in order for them to exist. I mean there is no reason to have rating agencies if everybody is junk, as it seems most of the west is. This grading system is a joke within a farce.

Mon, 06/13/2011 - 15:03 | 1365521 CH1
CH1's picture

The rating agencies are, themselves, a farse. A sick, corrupt, joke.

Any honest rating agency would be shut down within days.

Mon, 06/13/2011 - 15:15 | 1365542 SMG
SMG's picture

I liked it better when Moody's and S&P were downgrading each other.  At least that was entertaining.

Mon, 06/13/2011 - 15:23 | 1365565 Caviar Emptor
Caviar Emptor's picture

Me 2

Mon, 06/13/2011 - 15:52 | 1365644 WALLST8MY8BALL
WALLST8MY8BALL's picture

its allways better to have someone else do your downgrading........

Mon, 06/13/2011 - 14:59 | 1365507 apberusdisvet
apberusdisvet's picture

Will Obama invade Belgium?  You just know that if the Greeks don't suck the big one, that the US marines will be waving the IMF flag at the Acropolis.

I'm gaining more respect for Ghadafi every day.

Mon, 06/13/2011 - 15:26 | 1365557 Azannoth
Azannoth's picture

Ghadafi is a petty ME dictator so are the assholes running Iran, but I must say if it's between them and the zionists I pick them(temporarily)

You know how I became a so called 'holocaust denier' ? Well Ahmadinejad made me(sort of) I never really looked into this story and believed of official version like everybody else, but than Ahmadinejad came out saying it didn't happen, so I think Wow a president of a country is saying this, he would not simply make a total idiot out of him self, so I went online typed 'holocaust denial' in Google and I was a convert after reading a few(donzen) pages .. so I can't say those people are all evil they have their uses

It's good to have 2 sides of a story, all am saying

Mon, 06/13/2011 - 16:17 | 1365677 falak pema
falak pema's picture

The notion of evil is relative in mortal world. The secret is to make your enemy look more vile than yourself. It is this game that the US Oligarchy is losing: as Hillary so aptly said, we are losing the media war to AL Jazeera! Now in Libya, the alternative to Q-daffy, dug up by the west in Benghazi are the same two stooges who in 2007 condemned 8 Bulgarian nurses with trumped up charges for having infected hundreds of Libyan children with the aids virus. Whereas all evidence pointed to pre-infected blood samples bought by Libyan health ministry from doubtful international sources. Convenient fall guys those nurses. Now four years later we pull out the usual suspects, ex Q-daffy henchmen, inquisition leaders,   upgraded as saviors of Libyan democracy! This is a stage managed CIA farce which is a classical play of "engineered game change" since sixty years and an insult to due diligence and Libyan self rule.

Now this machine is gaining momentum...SO you are right ...the USA is going rogue again..and the ex-Oligarchs who resist them begin to look clean, as US might is so rule bending and elephantine in china shop! 

Mon, 06/13/2011 - 16:42 | 1365723 Reptil
Reptil's picture

He (Obama) doesn't have to. The NATO headquarters (administration) is there.

BTW, Belgium will not be downgraded, simply because too much power is concentrated there, and they can't have some meddling yanks embarrass the EU elite. Quelle blamage!

Mon, 06/13/2011 - 15:00 | 1365514 AldoHux_IV
AldoHux_IV's picture

Sadly a whole system built upon flawed thinking and rapacious aristocratic ego centric entitlements.

Mon, 06/13/2011 - 15:16 | 1365544 zaknick
zaknick's picture

With a dash of KKK for good measure.

You're breaking the lemmings' hearts, man!!!

Mon, 06/13/2011 - 15:21 | 1365569 Caviar Emptor
Caviar Emptor's picture

"If you have to ask, you can't afford it" -Propaganda meme circa 1983

Mon, 06/13/2011 - 15:08 | 1365526 baby_BLYTHE
baby_BLYTHE's picture

Debt downgrades are boring and meaningless (Especially since they never get anything right).

Mon, 06/13/2011 - 15:10 | 1365532 williambanzai7
williambanzai7's picture

They just monitor the CDS spreads and follow the crowd in delayed action mode.

Mon, 06/13/2011 - 15:17 | 1365558 Dick Darlington
Dick Darlington's picture

But the banksters like it. Last time Spain was downgraded the tbtf-brigade was very excited because the rater left the outlook stable. So immediately after the downgrade yields on spanish gubbermint bonds headed south. Then followed the uber-rosy "research" reports telling it's all golden now and what not. Well, the honey moon didn't last long as we know but it's just one illustration how utterly dysfunctional the so called market is nowdays.

Mon, 06/13/2011 - 15:06 | 1365531 DoChenRollingBearing
DoChenRollingBearing's picture

Sudden Debt, pls drop me a gmail at my name.  You are hereby invited to read my blog, and I would REALLY LIKE a Guest Post or two from actual Europeans.

Mon, 06/13/2011 - 15:13 | 1365537 bank guy in Brussels
bank guy in Brussels's picture

All is cool in Belgium ... a wonderful place, life is sweet here, new government delayed or not. It is the land of wonderful hot waffles with whipped cream.

We don't need no stinking Standard & Poor's.

Mon, 06/13/2011 - 15:25 | 1365568 Temporalist
Temporalist's picture

You left out beer.

Mon, 06/13/2011 - 15:33 | 1365587 DoChenRollingBearing
DoChenRollingBearing's picture

Both of you guys invited too.  The reason for all the convolution is that I use my real name at my blog.

Mon, 06/13/2011 - 15:29 | 1365585 Caviar Emptor
Caviar Emptor's picture

I heard that Belgium threatened to embargo Trappist S&P is having second thoughts

Tue, 06/14/2011 - 05:40 | 1367144 Apostle of Unknown
Apostle of Unknown's picture

and we provide Europe with much needed battle fields. Really what would they do without us? that's why nobody is worried

Mon, 06/13/2011 - 22:39 | 1366707 A Nanny Moose
A Nanny Moose's picture

don't foget the ales...hic!

Mon, 06/13/2011 - 15:10 | 1365539 Urban Redneck
Urban Redneck's picture

It would be entertaining and ironic to watch an EUR rally in response to S&P publishing more garbage.

Mon, 06/13/2011 - 15:32 | 1365595 topcallingtroll
topcallingtroll's picture

S and P Is probably wishing they hadnt made that six month comment now.

Mon, 06/13/2011 - 15:17 | 1365546 Piranhanoia
Piranhanoia's picture

did you ever think you would have the best news site there was?  

thanks Tyler,  the place rocks.

Mon, 06/13/2011 - 15:17 | 1365549 Nothing To See Here
Nothing To See Here's picture

I'm willing to invest in a country which has no government. Now that's AAA business.

The fact that the rating agences are linking the absence of government with negative outlooks shows that they are political organisations rather than financial ones.

Mon, 06/13/2011 - 15:17 | 1365550 rubearish10
rubearish10's picture

Kudos to TD for the effort to get in front of the news and "call out" those pussy's. Tomorrow's post titled from TD will read: "As Mentioned Here Yesterday, S&P Cuts Belgium Ratings".


Come on baby!

Mon, 06/13/2011 - 15:17 | 1365556 PicassoInActions
PicassoInActions's picture

I tought all those cirminal organizations are not the rating agencies... They only supply their opinion and not the ratings. ( according to senat hearing)


Mon, 06/13/2011 - 15:21 | 1365559 Ripped Chunk
Ripped Chunk's picture

They forgot?

Mon, 06/13/2011 - 15:24 | 1365572 AG BCN
AG BCN's picture

The Outlook reminder triggers at 12am Eastern, expect it tomorrow morning.

Mon, 06/13/2011 - 15:24 | 1365573 carbonmutant
carbonmutant's picture

Greece is a Millstone around the EU's neck...

Mon, 06/13/2011 - 15:25 | 1365575 Dick Darlington
Dick Darlington's picture

Or is it vice versa...

Tue, 06/14/2011 - 04:44 | 1367114 MadeOfQuarks
MadeOfQuarks's picture

And the EU is a millstone around the neck of all who live within it.

Mon, 06/13/2011 - 15:28 | 1365581 Caviar Emptor
Caviar Emptor's picture

Look, Ben has it all planned out, all under control...if all the countries in the world go into excruciating debt then nobody can get in trouble. And if they don't print? Then we send in the Marines to run the printing presses for them. They'll wear regulation IMF uniforms and logos when they parachute in

Mon, 06/13/2011 - 15:28 | 1365582 Jim in MN
Jim in MN's picture

By the way it appears that Italians have said 'stuff it' to Berlusconi in the little matter of resuming nuclear power in Italy.  So you can add Italy to Germany and Switzerland in the Big Nuke Ban-Wagon of 2011....


Mon, 06/13/2011 - 17:42 | 1365916 Reptil
Reptil's picture

In contrast, on the other side of the globe, there's a different wind ablowing.


Head of Fukushima health study: 100 mSv/yr OK for pregnant moms —
 “Effects of radiation do not come to people that are happy…
They come to people that are weak-spirited”


Mon, 06/13/2011 - 15:37 | 1365611 TomB
TomB's picture

Unfortunately, Belgium still has a caretaker government plus six other governments and a gazillion of public servants to run the show.

Mon, 06/13/2011 - 16:33 | 1365721 Sudden Debt
Sudden Debt's picture

yeah, but those other governments are feeling the heat and want out.They know pretty well whats going to happen.


Mon, 06/13/2011 - 16:15 | 1365682 AboutAverage
AboutAverage's picture

Rating Agencies are the buggy whip in the advent of the car (Internet).   

Mon, 06/13/2011 - 16:13 | 1365685 falak pema
falak pema's picture

Long moules frites and belgian beer!

Mon, 06/13/2011 - 16:20 | 1365695 css1971
css1971's picture

Apparently belgium is doing just fine without a government...


Sounds like a plan to me.

Mon, 06/13/2011 - 16:28 | 1365701 Sudden Debt
Sudden Debt's picture

Our Belgium government solved this problem weeks ago.

Talking about the Belgium debt problem has become Taboe in the media, thus it's fixed.


And for the government, it's already decided that they'll wait for the 2012 elections to try again.

We also had a 20 billion austerity plan for the next 2 years 12 months ago, which has increased to 32 by now but untill the government can't appoint a comité to look into the options to make another comité that can do the research what would be the right thing to do in our political climat and who should lead the taskforce for the comité on how to do the austerity plans, there won't happen that much.

We're small in size but we can blow up the entire banking industry in Europe with the mess we created in the derivatives market.

Like our former president once said: A PROBLEM ONLY EXISTS WHEN IT OCCURS.

So there's still time to try to fix it untill there isn't anymore.

It's actually a very sound logic which I also use in my work. Just ignore the problem untill everybody forgets about it or untill something else happens that takes away the attention.


 Our finance minister also had a luminous idea. Just generate another 30 billion revenue source next year without increasing taxes.... on a 10 million populations thats 3000 euro per head. I have 2 kids, 1 wife so that would be 12000 euro next year for my family... good luck doing that I'd say....


Mon, 06/13/2011 - 16:29 | 1365705 Apeman
Apeman's picture

Come on S&P, downgrade this shithole of a country already. Beer is the only good thing we have.

Mon, 06/13/2011 - 16:30 | 1365716 Sudden Debt
Sudden Debt's picture

Why not. I'm pretty fascinated to see it happen to.

We deserve this shit to happen to us.


Tue, 06/14/2011 - 05:49 | 1367154 Apostle of Unknown
Apostle of Unknown's picture

Bring it on, there is no other choice. Any attempt to clean up Belgian govt spending would trigger waves of protests against "Anglo-saxon neoliberal plans" and evil speculators. Do you see any group of experienced politicians who have sufficient backbone to see this through? No, because the majority of them are weak 30-something fils-a-papas who have seen nothing in life except for their political student club and the salons and restaurants of Brussels. They're all lawyers and social science students and they all think they do a good job when a newspaper gives them 8/10 for "good communication style" or "good selection of trendy issues". Even daddy has been winning elections for 5 decades on colonizing the center of opinion and handing out inflated money.

Mon, 06/13/2011 - 16:33 | 1365712 Dick Darlington
Dick Darlington's picture

OT: June 19th the next date for new mass protests in Spain

Mon, 06/13/2011 - 16:52 | 1365762 Lucius_Junius_Brutus
Lucius_Junius_Brutus's picture

I live nearby and I'm sure of two things: one, if they do form a government, it will not last, two: they will split in two state, wallonia and flanders. No way around it. We have a saying here: there is only one Belgian left in Belgium, the king.

Mon, 06/13/2011 - 22:16 | 1366642 Buck Johnson
Buck Johnson's picture

Belgium is going to split, just watch.

Tue, 06/14/2011 - 06:15 | 1367169 Version 7
Version 7's picture

Didn't Van Rompuy once said that the only things that keep the country together are

beer and football?

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