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One Less In The AAA Club: Moody's Downgrades FrAAnce From AAA To Aa1 - Full Text

Tyler Durden's picture




 

After hours shots fired, with Moody's hitting the long overdue one notch gong on France:

  • MOODY'S DOWNGRADES FRANCE'S GOVT BOND RATING TO Aa1 FROM Aaa
     
  • FRANCE MAINTAINS NEGATIVE OUTLOOK BY MOODY'S

Euro tumbling. In other news, UK: AAA/Aaa; France: AA+/Aa1... Let the flame wars begin

From the release:

Moody's decision to downgrade France's rating and maintain the negative outlook reflects the following key interrelated factors:
 
1.) France's long-term economic growth outlook is negatively affected by multiple structural challenges, including its gradual, sustained loss of competitiveness and the long-standing rigidities of its labour, goods and service markets.
 
2.) France's fiscal outlook is uncertain as a result of its deteriorating economic prospects, both in the short term due to subdued domestic and external demand, and in the longer term due to the structural rigidities noted above.
 
3.) The predictability of France's resilience to future euro area shocks is diminishing in view of the rising risks to economic growth, fiscal performance and cost of funding. France's exposure to peripheral Europe through its trade linkages and its banking system is disproportionately large, and its contingent obligations to support other euro area members have been increasing. Moreover, unlike other non-euro area sovereigns that carry similarly high ratings, France does not have access to a national central bank for the financing of its debt in the event of a market disruption.

 

RATINGS RATIONALE

The first driver underlying Moody's one-notch downgrade of France's sovereign rating is the risk to economic growth, and therefore to the government's finances, posed by the country's persistent structural economic challenges. These include the rigidities in labour and services markets, and low levels of innovation, which continue to drive France's gradual but sustained loss of competitiveness and the gradual erosion of its export-oriented industrial base.

 The rise in France's real effective exchange rate in recent years contributes to this erosion of competitiveness, in particular relative to Germany, the UK and the US. The challenge of restoring price-competitiveness through wage moderation and cost containment is made more difficult by France's membership of the monetary union, which removes the adjustment mechanism that the ability to devalue its own currency would provide.

Apart from elevated taxes and social contributions, the French labour market is characterised by a high degree of segmentation as a result of significant employment protection legislation for permanent contracts. While notice periods and severance payments are not significantly higher than they are in other European countries, some parts of this legislation make dismissals particularly difficult. This judicial uncertainty raises the implicit cost of labour and creates disincentives to hire. In addition, the definition of economic dismissal in France rules out its use to improve a firm's competitiveness and profitability.

Moreover, the regulation of the services market remains more restrictive in France than it is in many other countries, as reflected in the OECD Indicators of Product Market Regulation. The subdued competition in the services sector also has a negative effect on the purchasing power of households and the input costs of enterprises. France additionally faces significant non-price competitiveness issues that stem from low R&D intensity compared to other EU countries.

Moody's recognises that the government recently announced measures intended to address some of these structural challenges. However, those measures alone are unlikely to be sufficiently far-reaching to restore competitiveness, and Moody's notes that the track record of successive French governments in effecting such measures over the past two decades has been poor.

The second driver of today's rating action is the elevated uncertainty with respect to France's fiscal outlook. Moody's acknowledges that the government's budget forecasts target a reduction in the headline deficit to 0.3% of GDP by 2017 and a balancing of the structural deficit by 2016. However, the rating agency considers the GDP growth assumptions of 0.8% in 2013 and 2.0% from 2014 onwards to be overly optimistic. On top of rising unemployment, France's consumption levels are being weighed down by tax increases, subdued disposable income growth and a correction in the housing market. Net exports are unlikely to drive economic activity in light of reduced external demand, in particular from euro area trading partners such as Italy and Spain.

As a result, Moody's sees a continued risk of fiscal slippage and of additional consolidation measures. Again, based on the track record of successive governments in implementing fiscal consolidation measures, Moody's will remain cautious when assessing whether the consolidation effort is sufficiently deep and sustained.

The third rating driver of Moody's downgrade of France's sovereign rating is the diminishing predictability of the country's resilience to future euro area shocks in view of the rising risks to economic growth, fiscal performance and cost of funding. In this context, France is disproportionately exposed to peripheral European countries such as Italy through its trade linkages and its banking system.

Moody's notes that French banks have sizable exposures to some weaker euro area countries. As a result, despite their good loss-absorption capacity, French banks remain vulnerable to a further deepening of the crisis due to these exposures and their significant -- albeit reduced -- reliance on wholesale market funding. This vulnerability adds to the government's contingent liabilities arising from the French banking system.

Moreover, France's credit exposure to the euro area debt crisis has been growing due to the increased amount of euro area resources that may be made available to support troubled sovereigns and banks through the European Financial Stability Facility (EFSF), the European Stability Mechanism (ESM) and the facilities put in place by the European Central Bank (ECB). At the same time, in case of need, France -- like other large and highly rated euro area member states -- may not benefit from these support mechanisms to the same extent, given that these resources might have already been exhausted by then.

In light of the liquidity risks and banking sector risks in non-core countries, Moody's perceives an elevated risk that at least part of the contingent liabilities that relate to the support of non-core euro area countries may actually crystallise for France. The risk that greater collective support will be required for weaker euro area sovereigns has been rising, most for notably Spain, whose economy and government bond market are around twice the combined size of those of Greece, Portugal and Ireland. Highly rated member states like France are likely to bear a disproportionately large share of this burden given their greater ability to absorb the associated costs.

More generally, further shocks to sovereign and bank credit markets would further undermine financial and economic stability in France as well as in other euro area countries. The impact of such shocks would be expected to be felt disproportionately by more highly indebted governments such as France, and further accentuate the fiscal and structural economic pressures noted above. While the French government's debt service costs have been largely contained to date, Moody's would not expect this to remain the case in the event of a further shock. A rise in debt service costs would further increase the pressure on the finances of the French government, which, unlike other non-euro area sovereigns that carry similarly high ratings, does not have access to a national central bank that could assist with the financing of its debt in the event of a market disruption.

Today's rating action on France's government bond rating was limited to one notch given (i) the country's large and diversified economy, which  underpins France's economic resiliency, and (ii) the government's commitment to structural reforms and fiscal consolidation. The limited magnitude of today's rating action also reflects an acknowledgment by Moody's of the French government's ongoing work on a reform programme to improve the country's competitiveness and long-term growth perspectives, with key measures expected to be outlined in the National Pact for Growth, Competitiveness and Employment. Moreover, on the fiscal side, the European Treaty on the Stability, Coordination and Governance of the Economic and Monetary Union (TSCG), known as the "fiscal compact", will be implemented through the Organic Law on Public Finance Planning and Governance.

RATIONALE FOR CONTINUED NEGATIVE OUTLOOK

Moody's decision to maintain a negative outlook on France's government bond rating reflects the weak macroeconomic environment, and the rating agency's view that the risks to the implementation of the government's planned reforms remain substantial. Moreover, Moody's currently also holds negative outlooks on those Aaa-rated euro area sovereigns whose balance sheets are expected to bear the main financial burden of support via the operations of the EFSF, the ESM and the ECB. Apart from France, these countries comprise Germany (Aaa negative), the Netherlands (Aaa negative) and Austria (Aaa negative).

WHAT COULD MOVE THE RATING UP/DOWN

Moody's would downgrade France's government debt rating further in the event of additional material deterioration in the country's economic prospects or difficulties in implementing reform. Substantial economic and financial shocks stemming from the euro area debt crisis would also exert further downward pressure on France's rating.

Given the current negative outlook on France's sovereign rating, an upgrade is unlikely over the medium term. However, Moody's would consider changing the outlook on France's sovereign rating to stable in the event of a successful implementation of economic reforms and fiscal measures that effectively strengthen the growth prospects of the French economy and the government's balance sheet. Upward pressure on France's rating could also result from a significant improvement in the government's public finances, accompanied by a reversal in the upward trajectory in public debt.

COUNTRY CEILINGS

France's foreign- and local-currency bond and deposit ceilings remain unchanged at Aaa. The short-term foreign-currency bond and deposit ceilings remain Prime-1.

 

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Mon, 11/19/2012 - 18:15 | 2997042 Neethgie
Neethgie's picture

Europe is fucked.. i can't wait for the eu to die..

Mon, 11/19/2012 - 18:23 | 2997090 xamax
xamax's picture

EVERYTHING IT TAKES,BELIEEEEEEVE ME

Mon, 11/19/2012 - 18:33 | 2997143 redpill
redpill's picture

OMG look at that chart!  It's the dreaded TRON RECOGNIZER pattern!

Mon, 11/19/2012 - 19:23 | 2997291 ghengis86
ghengis86's picture

HAa1 HAa1 HAa1!!!

Mon, 11/19/2012 - 19:39 | 2997312 Dalago
Dalago's picture

Moody's and everyone else but Egan Jones gets paid from their issuer.  Its like I'm paying you to make me look good.  Moody's, S&P, and Fitch are on the sell side.  EJ is on the buy (our) side.  So I'm guessing that the EU is much worse that what these worthless rating agencies (sans EJ) will publish.  I'll be celebrating like this when the EU finally falls: http://www.youtube.com/watch?v=chCe67quwV0

Mon, 11/19/2012 - 20:05 | 2997418 TruthInSunshine
TruthInSunshine's picture

As the talking heads harped incessantly about PIIGS, I was speaking of PIIGS+France+U.K. last year (which another ZH member acronym-ized as PIIGSFUK).

France's & the UK's economies are severely contracting in real terms currently. Just like in the U.S., the proxy information disseminators of the government are pushing the pedal to the metal to pump out headlines and newscasts to distract the sheeple from the economic implosion taking place, and to do everything possible to project an illusion of relative economic normalcy.

Most intelligent life forms now recognize the reality that the EU will be radically re-shaped, and will not even remotely resemble what it did prior to 2008.

Some of these same intelligent life forms also now realize that one of the reasons for this is that the fractional reserve central banks, with two of these most prominent cartel members having their headquarters in London & New York, respectively, not only are not attempting rational monetary policy, but for whatever reason (anyone is free to add their conjecture and postulates as to the why), are engaged in monetary policy that has the effect of breaking markets, sowing uncertainty & debasing living standards.

If people want to know what the U.S. will look like in 20 to 30 years, just look to the U.K.  We are literally 20-30 years behind the U.K.'s footsteps in terms of living standards, real economic productivity & standards of living.

This makes perfect sense as the BOE & Federal Reserve are twins born of the same mother, serving the same masters.

Mon, 11/19/2012 - 20:30 | 2997475 DoChenRollingBearing
DoChenRollingBearing's picture

Hmm, if the UK is, call it 20 years "ahead" of us, and IF gold matches its price rise since then, that would imply gold at $6000 or more.  Yeah, I know, just one inaccurate and bad metric, but just sayin'...

Mon, 11/19/2012 - 21:15 | 2997589 Chupacabra-322
Chupacabra-322's picture

Yup.  I'm just waiting on a GLD margin call rise so I can go ape shit on a spending spree.

Tue, 11/20/2012 - 00:22 | 2997938 old naughty
old naughty's picture

"One less in the AAA Club..."

How many left (not that they matter)? Wait till the last one down, where will gold be?

Tue, 11/20/2012 - 00:56 | 2997968 TruthInSunshine
TruthInSunshine's picture

In my response above, I mistakenly stated "living standards" twice, when I meant to include a "massive wealth divide" (aka continued annihilation of the middle class that made the U.S. the most powerful nation at one time, probably near 1968; the larger a true middle class of a nation, coupled with the a system that allows for the bright and/or motivated to rise the economic ladder, the more powerful it is).

The U.K. has a true FIRE economy now, with a manufacturing sector approximately 1/8th the size it was, in real terms (relative to overall GDP), during the period that Britain was the preeminent world power. Today, London, with its various financial zombies & overpaid employees, subsidized off the teat of the British taxpayer, might as well be a different nation than the rest of the U.K., in terms of cost of living, standard of living, and the mind blowing government subsidization it receives.

New York City is the U.S.'s London, for the same reasons.

It beyond ironic that New York City is the bastion of liberalism in the U.S., yet New York City probably has the largest wealth divide, and smallest relative middle class, of any city in the country.

Mon, 11/19/2012 - 20:33 | 2997484 nmewn
nmewn's picture

"...but for whatever reason (anyone is free to add their conjecture and postulates as to the why), are engaged in monetary policy that has the effect of breaking markets, sowing uncertainty & debasing living standards."

There was a time, I believed they were just incompetent. Now there can be no doubt that they (the NY investment banks & government) wish to enslave their respective populations.

Not the chains & bondage type enslavement...but the "needy kind" of enslavement. What does it say about a government that takes away the ability to move upwards for entire segments of a society while promising them treats if they just continue to support it's actions?

Furthermore, what does it say about those who readily succumb to it?

Just gimme my free shit, fuck my neighbor, I don't like him anyways, he's got a better job, foxier wife, bigger boat...yes, this is how its done. Envy, greed...followed by fraud, graft & corruption...all aboard!!!

Mon, 11/19/2012 - 20:36 | 2997489 Michaelwiseguy
Michaelwiseguy's picture

American news agencies should be declared criminal organizations using psychological operations on the people.

They should be required to display a warning label; Lies of omission and brainwashing tactics are being used on our viewers 24/7. Buyer beware.

Mon, 11/19/2012 - 20:34 | 2997490 Overfed
Overfed's picture

Really think it'll take 20-30 years? Things are accelerating. Give it 10, max. Notwithstanding a financial/social collapes, which is certainly well within the realm of possibility.

Mon, 11/19/2012 - 20:39 | 2997502 RealFinney
RealFinney's picture

Missing out on calling it IFUKPIGS there, surely...

Mon, 11/19/2012 - 21:24 | 2997595 TruthInSunshine
TruthInSunshine's picture

+1

Or iFuckpiigs, given the new iEconomy-- which recently had a New York Times article discussing it, wherein they decried the injustice of those who write mobile apps for Apple and Android not being able to sufficiently supplement their incomes in these tough times:

 

As Boom Lures App Creators, Tough Part Is Making a Living

As Boom Lures App Creators, Tough Part Is Making a Living

 

ROSEDALE, Md. — Shawn and Stephanie Grimes spent much of the last two years pursuing their dream of doing research and development for Apple.

 

But they did not actually have jobs at Apple. It was freelance work that came with nothing in the way of a regular income, health insurance or retirement plan. Instead, the Grimeses tried to prepare by willingly, even eagerly, throwing overboard just about everything they could.

 

They sold one of their cars, gave some possessions to relatives and sold others in a yard sale, rented out their six-bedroom house and stayed with family for a while. They even cashed in Mr. Grimes’s 401(k).

 

“We didn’t lose any sleep over it,” said Mr. Grimes, 32. “I’ll retire when I die.”

 

...

 

Yet with the American economy yielding few good opportunities in recent years, there is debate about how real, and lasting, the rise in app employment might be.

 

Despite the rumors of hordes of hip programmers starting million-dollar businesses from their kitchen tables, only a small minority of developers actually make a living by creating their own apps, according to surveys and experts. The Grimeses began their venture with high hopes, but their apps, most of them for toddlers, did not come quickly enough or sell fast enough..

 

 

Tue, 11/20/2012 - 05:21 | 2998136 Boeing Boy
Boeing Boy's picture

You talk utter bollox.

 

From someone who has been visiting the US 2-3 times a month for the last several years and who resides in the UK.  Coming to US is like visiting an analogue country compared with Europe.  You haven't got a single clue what you are talking about.

Tue, 11/20/2012 - 05:45 | 2998149 Boeing Boy
Boeing Boy's picture

Ha, you have a US Govt exercising the lack of financial discipline onw would normally associate with Argentina and state that you have 20-30 years lead on the UK?  

 

Listen, the drugs don't work.  Friday night turns into FRi Sat, followed by the whole weekend then thursday's as well...

Mon, 11/19/2012 - 19:32 | 2997316 nmewn
nmewn's picture

Sacre Bleu!!!

Mon, 11/19/2012 - 20:07 | 2997424 Jethro
Jethro's picture

And the market yawns with a "mon do me!". Same as it ever was. Same as it ever was.

Mon, 11/19/2012 - 20:08 | 2997427 Fredo Corleone
Fredo Corleone's picture

Tu as volé mon tonnerre, Nmewn...

Aa1 ? C'est la merde !

Mon, 11/19/2012 - 20:16 | 2997443 nmewn
nmewn's picture

"Tu as volé mon tonnerre"

Sorry bout that...yeah, everyones looking at everyone else saying to themselves "You're gonna Welsh on me aren't you?"...lol...helluva way to run a capital market.

Ahhh well, tax the rich, feed the poor, till there are no rich no more...Ten Years After...

http://www.youtube.com/watch?v=jzrUqAtUcpU

Mon, 11/19/2012 - 23:41 | 2997850 GoinFawr
GoinFawr's picture

Great tune. Here's another: Locomotive Breath

"No way to slow down..."

Mon, 11/19/2012 - 20:28 | 2997464 DoChenRollingBearing
DoChenRollingBearing's picture

@ nmewn, et de la merde!!!

Mon, 11/19/2012 - 20:36 | 2997493 nmewn
nmewn's picture

Big piles of it...everywhere.

Mon, 11/19/2012 - 20:32 | 2997482 zorba THE GREEK
zorba THE GREEK's picture

The distance between Aa1 and ccc is shorter than any country is willing to admit.

Mon, 11/19/2012 - 18:27 | 2997105 Thecomingcollapse
Thecomingcollapse's picture

Click, Click, BOOM

Mon, 11/19/2012 - 18:34 | 2997147 HoofHearted
HoofHearted's picture

Next up: BBBelgium, GermAA+ny, SPA-in, ItA+ly...see how much fun this is.

Only problem is GrEEce is more like a shoe size than a sovereign rating.

Mon, 11/19/2012 - 18:53 | 2997202 spankfish
spankfish's picture

I would prefer DD's myself... just sayin'

Mon, 11/19/2012 - 22:14 | 2997700 zorba THE GREEK
zorba THE GREEK's picture

There is no problem rating GreeCCCes debt.

Mon, 11/19/2012 - 18:42 | 2997168 Beam Me Up Scotty
Beam Me Up Scotty's picture

Its more like tick, tick, tick, tick, tick, tick, tick........still waiting for the BOOM.

Mon, 11/19/2012 - 18:43 | 2997170 RmcAZ
RmcAZ's picture

RISE ABOVE

Mon, 11/19/2012 - 20:18 | 2997447 stocktivity
stocktivity's picture

It's all Bullshit! S&P 1386.89 today...up from 666 four years ago. Rally on!

Mon, 11/19/2012 - 23:07 | 2997806 Mentaliusanything
Mentaliusanything's picture

n'est rien sacré

Tue, 11/20/2012 - 06:33 | 2998183 samcontrol
samcontrol's picture

i can,t wait for the US to die ... how do you like that?

Mon, 11/19/2012 - 18:15 | 2997043 koaj
koaj's picture

they need to raise taxes...oh wait

Mon, 11/19/2012 - 18:16 | 2997047 a growing concern
a growing concern's picture

Zut alors!

Mon, 11/19/2012 - 18:20 | 2997074 ParkAveFlasher
ParkAveFlasher's picture

Arrest zem!

Mon, 11/19/2012 - 19:05 | 2997238 Parrotile
Parrotile's picture

Maybe sacre bleu might be more appropriate. C' nest pas tres bien du tout, pour toute le Monde.

Mon, 11/19/2012 - 18:17 | 2997054 VonManstein
VonManstein's picture

Fitch gonna whack USA next?

Tue, 11/20/2012 - 04:04 | 2998102 TruthInSunshine
TruthInSunshine's picture

Nope.

Corporations are people, and H.R. 4310: National Defense Authorization Act for Fiscal Year 2013 is a done deal, so they're rightfully fretful of waves of drone attacks.

Mon, 11/19/2012 - 18:18 | 2997060 fonzannoon
fonzannoon's picture

In other news Egan Jones laughs out loud.

Mon, 11/19/2012 - 18:19 | 2997072 BKbroiler
BKbroiler's picture

as does Sarkozy.  Hollande is a douche.

Mon, 11/19/2012 - 20:13 | 2997438 surf0766
surf0766's picture

And a communist. No?

Mon, 11/19/2012 - 19:25 | 2997296 fuu
fuu's picture

While scratching all 10 of his balls.

Mon, 11/19/2012 - 18:19 | 2997062 Cheshire
Cheshire's picture

Yep. The bailers become the bailees

Mon, 11/19/2012 - 18:19 | 2997066 HelluvaEngineer
HelluvaEngineer's picture

Wait - why did they tell me to follow the herd and buy the Euro today?

Mon, 11/19/2012 - 18:19 | 2997067 Big Ben
Big Ben's picture

To get the real rating, just subtract 15 notches from Moody's.

Mon, 11/19/2012 - 18:21 | 2997075 SHEEPFUKKER
SHEEPFUKKER's picture

Just subtract Moody's and let the market decide the rating. 

Mon, 11/19/2012 - 18:25 | 2997100 Unprepared
Unprepared's picture

Why would any one trust any rating agency that desribes itself as moody, poor or far-fitched?

Mon, 11/19/2012 - 18:19 | 2997068 slaughterer
slaughterer's picture

30 pips--not a big deal, as we learned from the US downgrade.  Everybody expected it.  Priced in. Now we can relax.  And rally.  

Mon, 11/19/2012 - 18:22 | 2997080 spastic_colon
spastic_colon's picture

yep....will evaporate when everyone realizes it was already front-ran today

Mon, 11/19/2012 - 21:40 | 2997643 CrashisOptimistic
CrashisOptimistic's picture

You do realize 2011 was a down year for the market?

Mon, 11/19/2012 - 18:20 | 2997073 VonManstein
VonManstein's picture

that explains todays market action then.

Mon, 11/19/2012 - 18:21 | 2997078 Neethgie
Neethgie's picture

i hate how undramatic ratings agencies are.. and fyi there should not be a rating system as it is at current...

It doesn't say anything really.. it should be based on Will i recieve the purchasing power of this money back + interest.. yes or no..

if answer is no then the bonds are junk

if answer is yes then good...

 

Mon, 11/19/2012 - 18:22 | 2997081 piliage
piliage's picture

Have no fear, boosting the common agricultural policy for French farmers will fix everything right back to AAA in a jiffy. It is great, Spanish, Italian, English, and German tax payers pay 600 Euros a year to subsidize French farmers. What could possibly go wrong?

Mon, 11/19/2012 - 18:22 | 2997082 Conman
Conman's picture

Lol - muppets get skewered as always.

Mon, 11/19/2012 - 18:22 | 2997083 cdude
cdude's picture

France @ Moody's ...Your mother is a hampster and your father smelt of elderberries. Go away before I fart in your general direction.

Mon, 11/19/2012 - 18:24 | 2997094 BraveSirRobin
BraveSirRobin's picture

I've already run far, far away.

Mon, 11/19/2012 - 18:22 | 2997084 Rustysilver
Rustysilver's picture

They still have two a's. That's go, no

Mon, 11/19/2012 - 18:25 | 2997097 Herodotus
Herodotus's picture

Standard & Poors have summoned the French finance minister to a meeting next week which is to be held in a railway carriage in a clearing in a forest outside Compiegne.

Mon, 11/19/2012 - 19:48 | 2997363 hairball48
hairball48's picture

Wasn't that  last Sunday? :)

Mon, 11/19/2012 - 18:26 | 2997106 magpie
magpie's picture

T'is but a fleshwound.

The Greek and Spanish bailouts will be adjusted accordingly.

Mon, 11/19/2012 - 19:35 | 2997324 XitSam
XitSam's picture

Downgrade is bullish! War is peace! EBT cards are food! Bailouts are growth! Paper is money!

Mon, 11/19/2012 - 18:31 | 2997127 Chuck Walla
Chuck Walla's picture

They need some Fed Firecrackers!

Mon, 11/19/2012 - 18:31 | 2997128 vote_libertaria...
vote_libertarian_party's picture

Whhhhhhhhhat?

 

Bailing out Ireland, Cyprus, Portugal, Italy, Spain, Greece, Belgium, all of the banks, etc. can negatively effect your finances?

 

Sucre Bleu! (blue sugar?)

Mon, 11/19/2012 - 18:35 | 2997149 Frank N. Beans
Frank N. Beans's picture

oooooo  yeahhhh this is a BIG FUCKING DEAL!!  the Euro TUMBLES 0.0001%.   I am SHOCKED. 

HEY, NOTHING HAS CHANGED.  EURO WILL RALLY MANANA.

Mon, 11/19/2012 - 18:36 | 2997150 Bay of Pigs
Bay of Pigs's picture

All Hail King Doelarr!

Mon, 11/19/2012 - 18:54 | 2997189 GoinFawr
GoinFawr's picture

Well SuM00dy had to do some'at, and queek!  After all, everyM00dy love$ SuM00dy.

Mon, 11/19/2012 - 18:38 | 2997159 Satan
Satan's picture

So basically Moody's get their research from The Economist.

Mon, 11/19/2012 - 18:44 | 2997171 Surrealist
Surrealist's picture

HOLD ON! This can't be! Spain's PM Rajoy says the worst of the euro crisis is now over!

Mon, 11/19/2012 - 18:46 | 2997177 Catflappo
Catflappo's picture

When the US was downgraded the 10yr yield was 3 point something or other and now its 1.60%.

The French should be delighted as the downgrade is likely to help their credit-worthiness, not hamper it.

 

It's the new normal!

 

Mon, 11/19/2012 - 18:52 | 2997201 RmcAZ
RmcAZ's picture

Downgrades are the new upgrades

Mon, 11/19/2012 - 18:51 | 2997198 spankfish
spankfish's picture

What took so long?

Mon, 11/19/2012 - 18:56 | 2997211 Stockmonger
Stockmonger's picture

Let the competitive devaluation spiral begin!

Mon, 11/19/2012 - 19:04 | 2997231 Eternal Complainer
Eternal Complainer's picture

Moody's engaged in terra?

Mon, 11/19/2012 - 19:08 | 2997243 JuliaS
JuliaS's picture

To ease the bond rating process, I propose we add a miniscule, a super small and a so-tiny-that-it's-almost-not-even-there "a" letters to the English alphabet.

Mon, 11/19/2012 - 19:12 | 2997250 Yen Cross
Yen Cross's picture

 Deep fried frog anyone? ;-)  Frances banks are already shit, so this is just a small formality.

Mon, 11/19/2012 - 19:19 | 2997278 cardis
cardis's picture

YC; It's over hotdogs. Replaced by chiens chauds.

Mon, 11/19/2012 - 19:30 | 2997307 Yen Cross
Yen Cross's picture

The 1980 movie , is supposed to be a comedy as well.

Mon, 11/19/2012 - 20:28 | 2997422 GoinFawr
GoinFawr's picture

Je regarder d' CAD traverser pour la EUR poutine confirmer.

Mon, 11/19/2012 - 20:31 | 2997477 Yen Cross
Yen Cross's picture

 That's an interesting trade. What time frame are you looking at?

Mon, 11/19/2012 - 20:38 | 2997500 Orly
Orly's picture

That's like 2300-pips!  No way!

Mon, 11/19/2012 - 20:56 | 2997548 Fíréan
Fíréan's picture

The chart presented here is a load of bollex in that it is clearly edited to give only  a partial picture of the most recent days trading : the telling part is edited out on the left hand side.

16th novermber the EUR/USD traded at a dip of 1.27.  Rose to a peak 19th of 1.2810+ ( 17/18th was weekend) before the present dip shown in chart accompanying this artcile. The dip shown here is minor by comparisonto the rise since last friday,  yet the reader isn't given the full picture to make such comparison. Go look at a chart showing full last week's trading moves.

Mon, 11/19/2012 - 22:19 | 2997564 GoinFawr
GoinFawr's picture

vous etes la chat...

non non, sérieusement, je suis joker.

Mon, 11/19/2012 - 19:12 | 2997258 Quantum Nucleonics
Quantum Nucleonics's picture

Next up, downgrading of the USAaa to USAa.

Mon, 11/19/2012 - 19:16 | 2997263 JuliaS
JuliaS's picture

USB

Mon, 11/19/2012 - 19:14 | 2997265 Quantum Nucleonics
Quantum Nucleonics's picture

Considering the socialst wacko they have running France, they should be thankful it wasn't a two notch downgrade. 

Mon, 11/19/2012 - 19:19 | 2997277 The Alarmist
The Alarmist's picture

Dammit, I just found a thousand francs in an old envelope in my desk, so even if the Banque de France reopens the window, whatever they give me in exchange will still be worthless.

Mon, 11/19/2012 - 19:23 | 2997287 chump666
chump666's picture

UK should be junk.

 

Mon, 11/19/2012 - 20:14 | 2997436 Orly
Orly's picture

The whole charade has been to prop up the Great British Pound Sterling because it was the one that really imploded after Lehman.  Lloyd's, RBS, etc...

What happened to the half-trillion dollars, Mr. Chairman?

Now, their mouthpieces are saying publicly that this isn't working so it makes me wonder what the next move is going to be...

Did they fix it enough where they're ready to take the hit?  Does the GBPUSD cross return to 1.53? Or lower?  That would take a tsunami of "risk-off" but with France being downgraded, who knows what happens in equity markets now.

:D

Mon, 11/19/2012 - 19:28 | 2997299 ekm
ekm's picture

Nothing's gonna happen.

The market cannot fall, it can only crater.

Timing of it is impossible, it could be tomorrow, it could next month it could be next year, but crater it will.

Mon, 11/19/2012 - 19:31 | 2997309 FinalCollapse
FinalCollapse's picture

Bullish! The Fed traders with unlimited digital $$$, big computer screens and tiny dicks are ready to buy everything.

Mon, 11/19/2012 - 19:32 | 2997317 real
real's picture

im sorry first i must say i drank to much tonight, second i thought it wise to goggle deficits and budgets with projections. and All i can say is everyone on here is an ass. it is obvious we have become delusional so why are we sitting here typing to each other. dont you think its time to walk out with the guns and start shooting? I just saw the movie Lincohn and that is a wonerful example of why we should just start shooting.

Mon, 11/19/2012 - 19:38 | 2997331 jomama
jomama's picture

go for it, dude.

Mon, 11/19/2012 - 19:33 | 2997319 Yen Cross
Yen Cross's picture

Here are the DOW/ES  CFD's currently.

 

  US 30 12757.00 12795.96 12794.00 12753.00 -38.96 -0.30% 23:25:58   SPX 500 1383.45 1386.89 1388.15 1382.75 -3.44 -0.25% 23:28:07
Mon, 11/19/2012 - 19:34 | 2997321 jubber
jubber's picture

French bonds at an ATH good opportunity to get short

Mon, 11/19/2012 - 19:34 | 2997323 lolmao500
lolmao500's picture

America, the UK, Germany (if they agree to one more bailout of anyone) need to be downgraded by every rating agencies pronto.

Mon, 11/19/2012 - 19:37 | 2997329 jomama
jomama's picture

took them long enough.

Mon, 11/19/2012 - 19:43 | 2997342 KarlGDenninger
KarlGDenninger's picture

I am not worried. In the past four months I have practiced and perfected the art of eating and recycling my own feces. I will not starve and I have no need to prep for armaggedon

Mon, 11/19/2012 - 19:44 | 2997347 KarlGDenninger
KarlGDenninger's picture

Our mining dome is almost complete. We are almost 100 feet below the surface of earth. I am the lords prophet. Follow me.

Mon, 11/19/2012 - 19:54 | 2997389 surf0766
surf0766's picture

I thought the 75% tax increased fixed everything .......... no?   Maybe 99% tax will. 

Mon, 11/19/2012 - 20:58 | 2997554 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

I am quite sure people in my city don't rake their leaves because they think the government will do it for them. 

The city is currently flooding because no water is draining from the streets.

This is America: drowning in complacency.

Mon, 11/19/2012 - 20:09 | 2997430 Goldenballs
Goldenballs's picture

Just buy everything before the fed does.Ring up Hollande and just say soon the whole country will be worthless so how much for the shitty little gaff and throw in Corsica too.

Mon, 11/19/2012 - 20:12 | 2997434 GreatUncle
GreatUncle's picture

"France does not have access to a national central bank for the financing of its debt in the event of a market disruption."

By that wording it could be implied that moody wants the ECB either move to France or alternatively to lose nation status, the new nation being the EZ.

Mon, 11/19/2012 - 20:17 | 2997444 orangegeek
orangegeek's picture

QE-Infinity failing strategy is not going to be able to compete with a utter failure in France.  It's battle of the losers folks.

 

And what does this mean?  Likely the US Dollar will climb.

 

http://bullandbearmash.com/chart/us-dollar-falls-hard-as-bets-are-made-o...

Mon, 11/19/2012 - 20:27 | 2997466 realtick
realtick's picture

Are You Fucking Kidding Me? Who Are These Assholes? http://chartistfriendfrompittsburgh.blogspot.com/2012/11/are-you-fucking...

Mon, 11/19/2012 - 22:05 | 2997688 Lloyd_Xmas
Lloyd_Xmas's picture

I just peed my pants

Mon, 11/19/2012 - 20:40 | 2997507 azengrcat
azengrcat's picture

'MericAA!!!

Mon, 11/19/2012 - 20:40 | 2997510 KarlGDenninger
KarlGDenninger's picture

I am the lords prophet. So said biff the angel. Join me and my sunday sermons. Peace be with you. Rocketman69@yahoo.com

Mon, 11/19/2012 - 20:46 | 2997525 j0nx
j0nx's picture

Euro tumbling? It's gained 40 pips in the last 30 minutes.

Mon, 11/19/2012 - 20:52 | 2997540 Global Hunter
Global Hunter's picture

I am like Tretyiak!

Mon, 11/19/2012 - 20:55 | 2997545 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

Who gives a fuck. 

All governments are broke.  All corporations are thieves.

Mon, 11/19/2012 - 21:14 | 2997581 q99x2
q99x2's picture

Time to join the French resistance. And lower that damn retirement age.

Meanwhile the President's out securing the Golden Triangle.

I want to see Nigel Farage get that Van Rompey in a head lock. When's LeGarde going to have the adams apple looked at? Whose paying the damn rating agency?

Mon, 11/19/2012 - 21:31 | 2997623 earleflorida
earleflorida's picture

by friday fitch downgrades the mighty english...

Tue, 11/20/2012 - 05:19 | 2998135 Boeing Boy
Boeing Boy's picture

Nonsense, all good in blighty land.

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