Sean Egan on Europe, and Why They Are Always Out in Front of the Other Ratings Agencies

CrownThomas's picture


Stunningly he didn't tout fixing a debt problem with adding more debt

"the problem to date, has been debt to gdp for most of the periphery countries has been increasing and it seems as though there's no end in sight for that"

On the real economy

"what you want to do is get a handle on how weak the banking sector is"

"History has shown that the banks & sovereign credit risk have been joined at the hip"

"as the banking sectors go, the countries go"

On the ECB helping

"All these injections effectively subordinate all the other creditors"

On how it all will end

"we're looking for a savior, and we haven't found one yet"

"you have to solve the underlying problem, and that is the fact that you have a heightened debt to gdp. Basically you have to figure out how to write down the debt to a manageable level"

And the punchline, which is priceless - Keene asks why Egan Jones is so far out in front of the other rating agencies

"Our business model is different. We're paid by investors, we have to earn our keep every single year. Basically we have to provide value to those investors or else they're not going to sign up again. S&P and Moody's are being paid by the issuers of debt, and they don't have the pressures to be as timely and as accurate as we do with our ratings"

"our initial positions seem crazy, over time the market came around. I think in the case of the EU, the same thing appears to be happening"

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Mon, 06/18/2012 - 02:16 | 2535551 otherleading
otherleading's picture

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Sat, 06/16/2012 - 16:59 | 2532658 riley martini
riley martini's picture

 The differnce is the fascist controlled agencies S&P and Moodys are paid to committ fraud for their owners as we have seen with the mortgage and securities fraud . Eagan Jones is paid by investors who need to know about the ratings fraud by Moodys and S&P.

Sat, 06/16/2012 - 16:37 | 2532630 blueridgeviews
blueridgeviews's picture

Sean Egan is out in front because he's looking in front of him.  The other agencies are looking in the rear view mirror.

Sun, 06/17/2012 - 00:01 | 2533149 Buck Johnson
Buck Johnson's picture

So correct that Egan Jones work for the investors not the issuer of debt.

Sat, 06/16/2012 - 16:37 | 2532629 YouMah
YouMah's picture

Interesting isn't it that the investors are paying Sean-Egan to deliver the ratings to all those that haven't paid for the information.

Sat, 06/16/2012 - 15:54 | 2532567 Spigot
Spigot's picture

As I have been maintaining for the past 6 years the total debt to GDP ratios are unsustainable. The Macro-masters (purported) have to reconcile this. One way is to write down debt. The other way is to increase nominal GDP via inflation. The  global bank masters (as a whole) have not aggreed to inflate the global money supply (yet). In spite of the trillions (name your currency) they have pumped into the system, these quantities are relatively minor compared to the overall quantities of debt. If they are going to use inflation, then they will need to quite literally print tens of trillions (in each respective currency). We ain't seen nothin' yet, compadres.

Sat, 06/16/2012 - 13:35 | 2532352 Grand Supercycle
Grand Supercycle's picture

Rally warning continues...

SPX-EURUSD-GBPUSD-AUDUSD-GOLD-SILVER bullish warning on daily charts strengthened further on Friday & more rally expected.

Shorts will be squeezed next week onwards.

DOW initial target approx 13,170 & more upside after that.

USDX daily chart bearish signal strengthened on Friday & further downside expected.

Sat, 06/16/2012 - 15:18 | 2532519 AldousHuxley
AldousHuxley's picture

investors funded rating agencies are not to be trusted either....

investors naturally want to buy low sell high. they will unfairly downgrade debt so that their investors can buy the debt at heavy discount, then magically upgrade debt when it is time to sell. Rothschilds and France-England war games played over again....


and then you have politically controlled chinese debt rating agencies.....



it is game of fooling the other.

Sat, 06/16/2012 - 16:03 | 2532580 LULZBank
LULZBank's picture

"Who will guard the Guardians?" _ Aristsotle

Sat, 06/16/2012 - 15:49 | 2532561 d_taco
d_taco's picture

Absolutely. No word about the UK and the US. Goming week the investers has to unwind their Euro shorts. So they are willing to pay to get other suckers in to the short trade.

It is remarkable that Zerohedge is nearly 90% about bashing Europe. And what about the UK? Wait and see how the Euro shorts will be burned the comming weeks. The Black Swan will not be Greece but the UK. 

Sat, 06/16/2012 - 13:28 | 2532343 Overfed
Overfed's picture

In a world full of lies, telling the truth is akin to treason. Ron Paul knows. Sean Egan is finding out.

Sat, 06/16/2012 - 12:33 | 2532240 theprofromdover
theprofromdover's picture

'how is all this gonna end? '

Its gonna end with the taxpayer taking over the entire debt, cos who's gonna stop them.

Why do the media insist on calling it a bail-out?

The troika say we'll lend you the money to pay off our friends in the european banks, but you now owe us, on our terms, and you can't default anymore.

That sounds like old-fashioned organised crime to me.

Sat, 06/16/2012 - 11:08 | 2532025 ebworthen
ebworthen's picture

"S&P and Moody's are being paid by the issuers of debt, and they don't have the pressures to be as timely and as accurate as we do with our ratings."

Which is why Egan-Jones is being "investigated" by the SEC and S&P and Moody's aren't.

The bankers don't like investors who aren't suckers or who don't line up for their manure burritos.

Sat, 06/16/2012 - 10:11 | 2531944 shovelhead
shovelhead's picture

A business model that has to provide value to it's customers?

How quaint. It'll never catch on. Too old fashioned.

Sat, 06/16/2012 - 11:29 | 2532086 Matt
Matt's picture

The other ratings agencies provide value to their customers as well. They help borrowers get loans at lower interest rates. Their customers are the borrowers.

Sat, 06/16/2012 - 10:04 | 2531933 Faceberg
Faceberg's picture

Sean Egan is the man. Moody's, S&P and Fitch aren't fit to shine his shoes.

Sat, 06/16/2012 - 13:51 | 2532384 LeisureSmith
LeisureSmith's picture

"Danm the torpedoes, go straight for the jugular cuz i'm all out of bubblegum"

Sean Egan.

Sat, 06/16/2012 - 09:37 | 2531886 ITrustMyGut
ITrustMyGut's picture

as hopeful as their voice is.. well.. hopeful becasue someone with a small stage speaks truth to power.. in the end.. meaningless.. I mean.. shouldn't all global banks.. be rated F anyway.. as opposed to these silly b++ ( negative out look ) blah blah?

fiat is ponzi... period. always was, always will be... dont have to have spent a career in the industry to understand that concept...

Sat, 06/16/2012 - 09:32 | 2531877 Unbezahlbar
Unbezahlbar's picture

Using Inflation to Solve the Debt Problem:


As the US debt-to-GDP ratio rises towards 100%, policymakers will be tempted to inflate away the debt. This column examines that option and suggests that it is not far-fetched. US inflation of 6% for four years would reduce the debt-to-GDP ratio by 20%, a scenario similar to what happened following WWII.

Sat, 06/16/2012 - 12:57 | 2532288 OneTinSoldier66
OneTinSoldier66's picture

Inflate away debt by adding more state issued fiat paper debt-based currency? I'm not falling for it.


I'm for something like the following Gold based solution...

Sat, 06/16/2012 - 10:34 | 2531978 Crab Cake
Crab Cake's picture

Yeah, thats the usual way out historically, but 20% isnt going to cut it. The real US debt to gdp is way more than being reported. Like everything else theyve cooked the numbers to look acceptable. This all ends in war and collapse.

Sat, 06/16/2012 - 09:26 | 2531868 Peter Pan
Peter Pan's picture

The good news is that gold does not need a ratings agency. Never has. Never will.

Sat, 06/16/2012 - 09:55 | 2531914 kindape
kindape's picture

unless its Tungsten.

Sat, 06/16/2012 - 22:17 | 2533014 Peter Pan
Peter Pan's picture

In which case a simple assay will do the trick.

Sat, 06/16/2012 - 09:12 | 2531849 Hulk
Hulk's picture

Sean Egan, the last Adult left in the Financial World...

Sat, 06/16/2012 - 10:06 | 2531844 Zero Govt
Zero Govt's picture

"S&P and Moody's are being paid by the issuers of debt.."

conflict of interest red alert

Barney Frank is snoozing, Chris Dodd is comatose, the President is on the golf course (again?) and the Senate Financial Committee are bizzy on executive biz down at the NY Bilderberg Boys Club smoking cigars and drinking brandy

ie. they're really on the case forseeing and preventing accidents occuring

Sat, 06/16/2012 - 14:30 | 2532438 HoofHearted
HoofHearted's picture

More red alerts- the Basel accords started by having all G-10 debt as having ZERO risk....that includes e.g. Italy and Japan. On the other hand all corporate debt was considered 100% risk in the calculations. Now, which is more likely to have troubles paying up...Italy or Apple???

Sat, 06/16/2012 - 09:09 | 2531840 Jack Sheet
Jack Sheet's picture

We've sean all this before

Sat, 06/16/2012 - 04:11 | 2531580 falak pema
falak pema's picture

even the rating shills are now eating each other; its every shill for himself and may the devil take the hindmost in this crazy casino. I don't buy latter day "holier than thou" logic, once the horse has bolted from the barn and the stables are now full of toxic waste. We need a Hercules not a bean counter gone virtuous. A "Saviour"?, Out of which book of phony Testaments? All Caesar's toys! 

Sat, 06/16/2012 - 09:21 | 2531860 Jack Sheet
Jack Sheet's picture

"Tom" sounds like he's been gargling on barbed wire. "Sean" worked for Oppenheimer.

Sat, 06/16/2012 - 15:31 | 2532536 Michael
Michael's picture
  We're paid by investors, we have to earn our keep every single year. S&P and Moody's are being paid by the issuers of debt, So if someone else doesn't like it, they can go fuck themselves.
Sat, 06/16/2012 - 08:42 | 2531785 Iconoclast
Iconoclast's picture

Hahah, love if, every shill for himself as they man their own life boats, that they've already holed below the water line..

Sat, 06/16/2012 - 01:42 | 2531481 Nobody For President
Nobody For President's picture

Perhaps Diogenes can now put down his lamp.

Fri, 06/15/2012 - 22:30 | 2531231 DavosSherman
DavosSherman's picture

The new "dawler" is coming soon.

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