Egan Jones Downgrades Germany From AA- To A+

Tyler Durden's picture


The unstoppable Egan-Jones juggernaut continues:

6/26/2012: Federal Republic Of Germany: EJR lowered AA- to A+ (Neg.) (S&P: AAA) (3413Z GR)
Stuck - whether or not Greece and other EMU members exit, Germany will be left with massive, additional, uncollectable receivables. Via the ECB's Target 2, Germany is owed EUR700B of which perhaps 50% is collectible and then there is the banks' southern EMU exposures.  Germany's debt to GDP was 87% as of 2011. However, increasing Germany's debt by EUR700B to EUR2.9T for its indirect exposures raises the adjusted debt to GDP to 114%. The deficit to GDP of 1.0% is reasonably strong. Unemployment is 6.8% but will probably rise as global economies continue to show weakness. The positive (EUR130B) balance of trade and the positive (EUR196B) current account help. Inflation has been moderate at .9% (per Eurostat). 


We used the IMF's data for Germany's debt which is 10% great than Eurostat's data. German chancellor Angela Merkel continues to create tension with EU member states by resisting calls for EU bonds (shared liabs.), money printing calls and for her pushing for fiscal controls and the seniority of bailout funding. Germay is likely to be outvoted by other ECB members and therefore will have greater prospective exposure. Watch for the EFSF and the ESM morphing into banks (thereby depressing eventual recoveries) and a rise in the number of euros. The fallout from a likely Greek exit needs to be monitored. We are cutting to "A+".

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Tue, 06/26/2012 - 14:52 | 2562410 capitallosses
capitallosses's picture

Slowly catching up with reality

Tue, 06/26/2012 - 14:58 | 2562444 ilion
ilion's picture

Bullish for stocks?

Tue, 06/26/2012 - 15:09 | 2562497 Xibalba
Xibalba's picture

bull up?  or bull shit?

Tue, 06/26/2012 - 15:34 | 2562591 Ahmeexnal
Ahmeexnal's picture

Swinehella Merdekel threatened europe with war just a few months ago if her fourth reich was threatened. As the reichstag is in flames and crumbling as we speak, has the german imperial family ordered the wehrmacht to march all over europe....ONE MORE TIME?

Tue, 06/26/2012 - 15:38 | 2562606 ChubbNut
ChubbNut's picture

Stop trying to be clever.

Tue, 06/26/2012 - 15:44 | 2562628 Ahmeexnal
Ahmeexnal's picture

Wealthy germans are escaping the burning euro:


Germans panic-buy over-priced Swiss houses

Published: 24 Jun 12 11:50 CET

Wealthy Germans are being pushed into panic-buying property at sky-high prices in Switzerland as fears grow for the safety of their euro assets, a newspaper reported on Sunday.

“Do something before the euro finally splutters its last cough and dies, taking your assets down with it.” This is the message Swiss investment companies are sending to wealthy Germans, Die Welt said on Sunday.

Tue, 06/26/2012 - 16:15 | 2562711 hedgeless_horseman
hedgeless_horseman's picture



“Do something before the euro finally splutters its last cough and dies, taking your assets down with it.”

If this is their thesis, then should they not instead buy German property, priced in Euros, with borrowed Euros?


Tue, 06/26/2012 - 16:26 | 2562765 brooklynlou
brooklynlou's picture

Wasnt that JPM's london whale bet?

Tue, 06/26/2012 - 23:16 | 2563853 Non Passaran
Non Passaran's picture

Yeah, like the euro socialists will let you be with you little house.
Even with the euro dead your house would still be in the socialist EU.

Tue, 06/26/2012 - 15:44 | 2562629 knukles
knukles's picture

Toldja toldja toldja
They say pffft to the agencies (including Egan, for they too are released from accountability and culpability, for they just don't matter no more) the agencies take the vengeance of the thwarted God, the fig tree who not bears fruit, the donkey who threw Mother Teresa because of the snake, the glass that was halfty fifty which held no water when they went to drink, the condom that burst, the I promise.....

The downgrades shall continue until reality detachment disorders improve.

Tue, 06/26/2012 - 18:54 | 2563185 flacon
flacon's picture

Either I had too many beers after work, or you had too many beers after work. Either way I feel drunk reading your post.  ;)

Wed, 06/27/2012 - 02:10 | 2564168 Heavy
Heavy's picture

I agree.  We should base a currency on whatever it is he's on.  Relatively reasonable at least.

Wed, 06/27/2012 - 07:16 | 2564395 Harlequin001
Harlequin001's picture

Me too.

'the fig tree who not bears fruit,'

Knukles, WTF...

Tue, 06/26/2012 - 16:07 | 2562704 ChubbNut
ChubbNut's picture

Stop trying to be clever.

Tue, 06/26/2012 - 21:52 | 2563626 Bananamerican
Bananamerican's picture

Viele Leute kümmern sich kein um ihrem Geld, bis sie fast zum Ende von ihm kommen, und andere tun gerade die selben mit ihrer Zeit.
Johann Wolfgang von Goethe

your move Chubbnut..... ;)

Tue, 06/26/2012 - 15:37 | 2562601 disabledvet
disabledvet's picture

"equities" actually. And for German companies who trade on the Deutche Borse I would say absolutely yes since they have a funding advantage that can't be beaten...both now (the only time in trader space) and going forward (the "other" time...also known as "investor space.) what is Bill GROSS'S Fund's name? I believe it's called the TOTAL return fund.

Tue, 06/26/2012 - 15:11 | 2562506 quintago
quintago's picture

Well this doesn't mean much, and in fact helps the rest because it reduces the "relativity" gap between the golden child and the delinquent.

Once this is all said and done though, there won't be anybody notable standing in the AA or better space.

Tue, 06/26/2012 - 14:52 | 2562413 YesWeKahn
YesWeKahn's picture

Next up, european commission investigates Egan Jones for manipulating the stock market.

Tue, 06/26/2012 - 15:34 | 2562590 Hippocratic Oaf
Hippocratic Oaf's picture

Does anyone really think Germany gives two shits what Egan Jones thinks?

Tue, 06/26/2012 - 16:28 | 2562775 masterinchancery
masterinchancery's picture


Tue, 06/26/2012 - 18:09 | 2563075 SimpleSimon
SimpleSimon's picture

Before or after they find "significant" errors in their ratings agency application?  Such as missing commas, italics, black not blue ink, etc.?

Tue, 06/26/2012 - 15:35 | 2562416 Village Smithy
Village Smithy's picture

Bill Gross just became very excited.

Tue, 06/26/2012 - 15:42 | 2562619 disabledvet
disabledvet's picture

No (know?) way of knowing actually. For all we know half his portfolio is in German debt! Of course you could argue "since the 70's we've gone from making the world safe for democracy" to "making the world safe for the mutual fund industry."

Tue, 06/26/2012 - 14:53 | 2562417 Stuart
Stuart's picture

that's your reward, Angela, for saying "nein".  lol

Tue, 06/26/2012 - 14:55 | 2562425 slaughterer
slaughterer's picture

Sean gegen Angela.  1:0.

Tue, 06/26/2012 - 15:05 | 2562466 SokPOTUS
SokPOTUS's picture


Tue, 06/26/2012 - 14:56 | 2562429 Robot Traders Mom
Robot Traders Mom's picture

And now the ratings nazis downgrade Germany...



Tue, 06/26/2012 - 14:56 | 2562430 Zombie Investor
Zombie Investor's picture

Sauerkrat, bitchez!

Tue, 06/26/2012 - 14:58 | 2562432 Dr. Kananga
Dr. Kananga's picture

Kinda like what happens to your property values when all your neighbors turn into crackheads.

Tue, 06/26/2012 - 16:07 | 2562705 Frank N. Beans
Frank N. Beans's picture

You oughtta know, Dr.

Tue, 06/26/2012 - 16:39 | 2562805 Dr. Kananga
Dr. Kananga's picture

True. The hopium trade "ha bin berry berry good to me." Only fools still gamble on real estate.

Tue, 06/26/2012 - 14:57 | 2562435 pleseus
pleseus's picture

Clearly Bullish for Equitites.  Buy the dip.  S & P 1500 here we come.

Tue, 06/26/2012 - 15:11 | 2562457 Cult_of_Reason
Cult_of_Reason's picture

Germany caving (main reason for the downgrade) is bullish for equities (maybe bearish for EUR/USD), but the stupid algos selling on this news.

Tue, 06/26/2012 - 15:39 | 2562610 resurger
resurger's picture

 Short The Fucking Top

Tue, 06/26/2012 - 14:57 | 2562436 fonzannoon
fonzannoon's picture

Where does he rate the USA?

Tue, 06/26/2012 - 15:00 | 2562449 Robot Traders Mom
Robot Traders Mom's picture


Tue, 06/26/2012 - 15:36 | 2562598 Hippocratic Oaf
Hippocratic Oaf's picture

and on negative watch.

Tue, 06/26/2012 - 23:10 | 2563830 Bananamerican
Bananamerican's picture

"Where does he rate the USA?"


Tue, 06/26/2012 - 14:58 | 2562440 fuu
fuu's picture


Tue, 06/26/2012 - 14:58 | 2562442 distopiandreamboy
distopiandreamboy's picture

End of the quarter window dressing

Tue, 06/26/2012 - 15:16 | 2562443 Dr. Engali
Dr. Engali's picture

I think Sean and Angela both need to watch their backs now.

Tue, 06/26/2012 - 15:00 | 2562451 Seasmoke
Seasmoke's picture

A+ ??????.......who the hell made up these grades the NJEA union ?

Tue, 06/26/2012 - 15:49 | 2562642 lolmao500
lolmao500's picture

I think the N.S.D.A.P. ...

Tue, 06/26/2012 - 15:00 | 2562452 billybobtx
billybobtx's picture

Angela just let a huge wet bubbly queef...

Tue, 06/26/2012 - 15:20 | 2562543 cougar_w
cougar_w's picture

Not during lunch, please.

Tue, 06/26/2012 - 15:01 | 2562458 elwu
elwu's picture

"Germay is likely to be outvoted by other ECB members and therefore will have greater prospective exposure."

Who exactly will how exactly overvote Germany to empty her taxpayer's pockets even more?

BTW, Egan who?


Tue, 06/26/2012 - 15:06 | 2562480 Vincent Vega
Vincent Vega's picture

We were typing the same thing at the same time. Great minds......

Tue, 06/26/2012 - 15:02 | 2562459 Vincent Vega
Vincent Vega's picture

"Germany is likely to be outvoted by other ECB members and therefore will have greater prospective exposure."  Not if they pull out of the EU.

Tue, 06/26/2012 - 15:08 | 2562488 JR
JR's picture


If the health of your economy depends on the votes of your neighbors, and you continue to work with them, then you deserve to be downgraded.

Tue, 06/26/2012 - 15:02 | 2562463 devo
devo's picture

Greece isn't leaving, Germany is.

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