UK's George Osborne Responds To Moody's Downgrade

Tyler Durden's picture


Osborne's statement was prepared well in advance, which means Moody's action was not only prepared and distributed long ago but it got the blessing of both the UK government and Goldman Sachs. And why not: so far it has achieved precisely what it was intended to: crush the Pound. The next question: when does talk of GBP-EUR parity begin?

Moodys has just downgraded Britain’s credit rating from AAA to Aa1


The Chancellor George Osborne released the following statement after the UK lost its AAA credit rating with agency Moody's:


Tonight we have a stark reminder of the debt problems facing our country - and the clearest possible warning to anyone who thinks we can run away from dealing with those problems.


Far from weakening our resolve to deliver our economic recovery plan, this decision redoubles it.


We will go on delivering the plan that has cut the deficit by a quarter, and given us record low interest rates and record numbers of jobs.


As the rating agency says, Britain faces huge challenges at home from the debts built up over many many years, and it is made no easier by the very weak economic situation in Europe.


Crucially for families and businesses, they say that ‘the UK's creditworthiness remains extremely high’ thanks in part to a ‘strong track record of fiscal consolidation’ and our ‘political will’.


They also make it absolutely clear that they could downgrade the UK’s credit rating further in the event of ‘reduced political commitment to fiscal consolidation’.


We are not going to run away from our problems, we are going to overcome them.


– George Osborne

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Fri, 02/22/2013 - 18:14 | 3268371 blabam
blabam's picture

Good thing those pm's are down!

Fri, 02/22/2013 - 19:47 | 3268639 max2205
max2205's picture

Now we know why the 'market' tanked wed

Fri, 02/22/2013 - 18:16 | 3268375 hugovanderbubble
hugovanderbubble's picture

Chinese Funds will be EUR sellers, cos France will be downgraded to AA

Fri, 02/22/2013 - 18:23 | 3268386 magpie
magpie's picture

Still believe Germany goes down a notch first before France or Japan are downgraded again...btw any idea on which 3 dates in the year EU downgrades are even being allowed ? Frontrunning should be immediately visible, like in the UKs case.

Fri, 02/22/2013 - 20:25 | 3268755 schatzi
schatzi's picture

It will be difficult to downgrade Germany currently. They're running a budget surplus. The "only" things that could screw Germany over, are its overdependence on trade and much of the proceeds of European trade ending up as claims in the accounting no-mans land of the Target2 balance sheet. If Moody's et al would bring that as a reason to the fore, they might as well challenge the whole € construct, but that would go a step too far for their banker friends.

Fri, 02/22/2013 - 21:26 | 3268843 magpie
magpie's picture

Why should the rationale be the same for Germany as for the UK downgrade. Though you can criticize the floundering economic fundamentals they would i assume clearly go for the ESM/EFSF liabilities, e.g. Spain, Italy and France having a bailout forced on themselves for their own good etc.

Then why would they need anything realistic to base their ratings on at all ? Keeping the ponzi going requires balancing acts in the race to debase, and i figured there are only rules to be followed: one, no 'important' country can have AAA, two US treasuries have to remain bid - requiring the petrodollar stays and the capital shifts in the right direction after downgrades. The carusell goes on.

Fri, 02/22/2013 - 18:16 | 3268376 LawsofPhysics
LawsofPhysics's picture

"redoubles" -  Bah ha ha ha ha!  Pompous ass.

Fri, 02/22/2013 - 18:16 | 3268377 TideFighter
TideFighter's picture

wait for it...pop goes the dollar. 

Fri, 02/22/2013 - 18:17 | 3268379 Missiondweller
Missiondweller's picture

But Krugman said they could run deficits forever and it was no big deal?


What's up with that?

Fri, 02/22/2013 - 19:05 | 3268513 timbo_em
timbo_em's picture

That's an easy one: The deficits are just too small. Things will improve once deficit are in double digits, see Spain and Rajoy's take on his excellent work...oh wait...

Fri, 02/22/2013 - 18:22 | 3268389 ghostfaceinvestah
ghostfaceinvestah's picture

"In an effort to reduce our debts, we are calling on the BoE to forgive the debt that they own, in coordination with other central banks."

Fri, 02/22/2013 - 18:22 | 3268390 Black Forest
Black Forest's picture

when does talk of GBP-EUR parity begin?

Next month, or the day after. Christmas would also be a very good time.

Fri, 02/22/2013 - 18:31 | 3268415 Peter Pan
Peter Pan's picture

Parity will at least make monetary union psychologically and practically more acceptable, if either or both currencies still exist in the future.

Fri, 02/22/2013 - 18:23 | 3268395 Terminus C
Terminus C's picture

Weren't the brits wanting to devalue the pound?


Guess they got their wish... sans printing.  Policy tools bitches.

Fri, 02/22/2013 - 18:23 | 3268397 ghostfaceinvestah
ghostfaceinvestah's picture

"And in conclusion, we are opening an inquiry into Moody's rating of CDOs."

Fri, 02/22/2013 - 18:27 | 3268406 Peter Pan
Peter Pan's picture

I may well be mistaken, but gold and silver have been crushed otherwise there would have been windfall profits to certain precious metals owners with the devaluations of those currencies.

In other words the big boys wanted to crush the argument of the gold bugs that precious metals guard against devaluation.

I'd welcome a reasoned contrary view as it is just conjecture on my part.

As for the UK, she must be ruing the day she decided to send convicts to Australia instead of leaving them in England and taking the rest of the population to Australia.

Sat, 02/23/2013 - 11:08 | 3269723 nobusiness
nobusiness's picture

Gold is priced in Dollars.  As the Pound weakens and the US Dollar strenghtens the price of gold should drop.  obviously Someone (Goldman) knew the down grade was coming.  We have to see but the price of gold in Pounds might go up like gold in Yen.

But I could be totally wrong

Fri, 02/22/2013 - 18:28 | 3268411 busted by the b...
busted by the bailout's picture

Competitive devaluation, aka currency war, continues apace.

If all currencies drop by 99.99%, do any of them actually fall?


Who wins when they all fall?

Fri, 02/22/2013 - 18:51 | 3268475 ShrNfr
ShrNfr's picture

He who owns gold or silver or oil or some other necessary recognized tangible.

Fri, 02/22/2013 - 21:03 | 3268835 Poor Grogman
Poor Grogman's picture

Everybody who uses those currencies to purchase anything tangible loses out.

Anyone who has too much debt gets their standard of living squeezed as cost of living prices increase.

If you have consumer debt even worse as there is no partially offsetting nominal gain as there is for some lucky R/E investors somewhere.

Anyone who does not use fiat currency is a winner, therefore everyone must be forced to use it so that the pain is equally shared.

PM holders will see the value of many fiat currencies change value abruptly against their stack.

Fri, 02/22/2013 - 18:32 | 3268421 stopcpdotcom
stopcpdotcom's picture

Put the issuance of money into the hands of the government which can then issue money without debt or interest attached.

Been done before - Bradbury pound.

Fri, 02/22/2013 - 18:47 | 3268447 falak pema
falak pema's picture

Sign of the times : Osborne, Cameron and Boris of London all belonged to an Oxbridge elitist decadent club that formed their links way back when they were students at Oxford.

Now they all row in the same political boat as it hits the rocks : poetic justice Bullingdon's boys! 

The Oxbridge student clubs that make David Cameron's Bullingdon chums look like Girl Guides | Mail Online

the "yes we can" becomes "we shall overcome"...Ironic, Hollande sings the same song.

To overcome you first have to recognise your enemy...who/what is the enemy?

And... if its you the enemy, then what? 

Fri, 02/22/2013 - 18:45 | 3268455 natronic
natronic's picture

If it was the US the statement would read like this.


Currently Moody's is acting outside of their allowed charter.  As you read this right now the DOJ is raiding Moody's offices around the world and we have already brought charges against the top 100 execs cuz they are part of the 1%.  We will confiscate their wealth and provide everyone with a voucher for a free snow cone.



Fri, 02/22/2013 - 18:46 | 3268456 sethstorm
sethstorm's picture

Enough of these downgrades and Moody's own existence may be downgraded to "silently coopted".

Fri, 02/22/2013 - 19:02 | 3268507 are we there yet
are we there yet's picture

What would the central bankers do if the Euro, british pound, and US dollar were simultaniously within close triple near parity at some future time?

Fri, 02/22/2013 - 19:12 | 3268528 Black Markets
Black Markets's picture

It was a master stroke by the UK to delay their downgrade until now.

Now they can dump tens of billions of GBP onto the market to crush cable and win the FX war, all under the guise of the Moody's downgrade.


It's the perfect cover story.


The British and London are ruthless bastards when it comes to such matters.

Fri, 02/22/2013 - 19:17 | 3268548 fuu
fuu's picture

We shall print on the beaches, we shall print on the landing grounds, we shall print in the fields and in the streets, we shall print in the hills; we shall never surrender.

Fri, 02/22/2013 - 19:19 | 3268552 magpie
magpie's picture

Never was so much owed by so many to so few

Fri, 02/22/2013 - 20:07 | 3268703 Atlantis Consigliore
Atlantis Consigliore's picture

Short Sterling, Short it to  1.00 US;   short it down. 

Fri, 02/22/2013 - 20:56 | 3268825 Edward Fiatski
Edward Fiatski's picture

Eventually, yes. Well, perhaps not to parity but within 10-15% of each other. I'd like to see the Pound defunct and replaced with a revalued EUR - it will happen eventually, BABYLON WASN'T BUILT IN A DAY!

Britain has nothing to offer to the world expect for illiterate chav peasantry & an out-dated, barbaric form of "culture" circa 1200 AD.

Your Johnny goes into the queen's WHAT-WHAT!

Fri, 02/22/2013 - 21:15 | 3268856 shinobi-7
shinobi-7's picture

Answer from Mr Montebourg to Moody's:

Thank you for righting to wrong of last year. You know how pissed off I was by the completely expected but unjust downgrade of France. We know that downgrades are an unavoidable part of decline but could you please from now on have the kindness to downgrade the UK first? (The weather, you know?)

Fri, 02/22/2013 - 21:50 | 3268937 Bunga Bunga
Bunga Bunga's picture

EU regulates the rating agencies, since January 2013 they have to consult governments upfront, otherwise they can shut down their business in the EU

No surprise here!

Fri, 02/22/2013 - 23:06 | 3269105 Hedgetard55
Hedgetard55's picture

When sharia is instituted in Britain people like Cameron and King and Osbourne will be losing their hands and their tongues. Same here in the US. Ben better have his go bag ready, and a private jet to a private island with a private army he can afford to pay.

Sat, 02/23/2013 - 01:30 | 3269342 Bunga Bunga
Bunga Bunga's picture

I hope he doesn't forget his private printer.

Sat, 02/23/2013 - 01:44 | 3269354 Notarocketscientist
Notarocketscientist's picture

Can someone show George this

Printing has failed

Austerity has failed

The UK is going to fail

Sat, 02/23/2013 - 04:53 | 3269488 Volaille de Bresse
Volaille de Bresse's picture

"Competitive devaluation, aka currency war, continues apace.

If all currencies drop by 99.99%, do any of them actually fall?


Who wins when they all fall?"



Sat, 02/23/2013 - 04:55 | 3269491 Volaille de Bresse
Volaille de Bresse's picture

The cradle will rock on Monday morning... Buy PMs this week-end!!

Sat, 02/23/2013 - 05:20 | 3269504 Kirk2NCC1701
Kirk2NCC1701's picture

/This is no cause to whack the US debt ratings, and hence way too early to raise the interest rates and whack the bonds and stock markets?  Right!?   The Grubmint still has fiat-wars, ammo, drones, etc to Ponzi-finance, right?  No real-world inflation coming, right?/sarc

Sat, 02/23/2013 - 06:14 | 3269524 Fiat agnostic
Fiat agnostic's picture

Japan prints, Venezuela devalues, ex-JPM dude talks down euro, sterling loses AAA - and the good old dollar stays firm, just as it was nearing a 'head and shoulder' break down point. Strange or all part of the plan?? 

Sat, 02/23/2013 - 11:53 | 3269769 d_taco
d_taco's picture

It was already known in april 2012 that the UK will lost it AAA.

There is no comparison between Germany and the UK. UK the same grade as Germany is absurd.

The current UK budget plan was base on a 2% growth. (There is no growth)

UK runs a growing budget deficit and a current account deficit for years and 0 growth. So it will be a matter of time before capital realise it can not make any gain in the UK: at that moment a currency crisis is in the make. This was already known in april 2012.

Zerohedge readers where distracted by the EURO hysteria. A EURO break up was the biggest nonsense, and the best trade of 2012 feeded by zerohedge. All suckers that flee the Euro to the Pound in May 2012 are now toasted.




Sat, 02/23/2013 - 20:00 | 3270512 smacker
smacker's picture



Osborne is a c***, only marginally more useful than everyone in the socialist Labour Party, particularly the two Red Eds and Hattie Hatemen.

Osborne's claim to have cut the UK deficit by a quarter is meaningless tripe as he well knows. Fact: he will fail to achieve a balanced budget by 2015 as he promised and national debt will be considerably higher than when he came into office. This despite that there remains enormous potential to seriously downsize government and rid the taxpayer of thousands of parasitic Civil Servants who spend their time plotting for the next socialist government.

And he loves to crow about interest rates being at their lowest level for zillions of years, whilst ignoring that zirp is crucifying savers and investors, creating more inflation because the £ is now living below stairs and as the UK imports so much, it's creating still more inflation. I'll ignore the temptation for mal-investment thru zirp because he almost certainly wouldn't understand it.

He also fails to mention that QE is destroying private pensions thru all-time low annuity rates and of course QE will add even further to inflation and ultimately to welfare costs as more and more people who "thought" they'd done the right thing find themselves penniless through insane govt policy.

You couldn't make this up. Yet another country run by nutters.


Sun, 02/24/2013 - 05:39 | 3271161 el-greco
el-greco's picture

Georgie Boy obviously had a few pipes and a few swigs before writing this statement. A spectacular piece of nonsense and contradictions.

Sun, 02/24/2013 - 14:24 | 3271828 dcau1
dcau1's picture

Fark GBP/EUR parity. I'm waiting for GBP/AUD parity.

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