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Egan Jones Downgrades Germany From AA To AA-
Sean Egan strikes again, this time downgrading Germany from AA to AA-.
Germany maintains its position as the European Union's top economy. However, Germany has been shouldering the burdens of other EU countries via its exposure to the EFSF and indirectly via the ECB's hefty exposure to the weaker banks and the weaker sovereign credits. The country's debt to GDP of 83% as of 2010 (expect near 86% for 2011) and a deficit to GDP of 4.6% is weak (and getting weaker) for a top-tier country. On the positive side, unemployment was only 6.8% but will probably increase as many EU countries implement austerity measures. Other positives were the positive (EUR133B) balance of trade and the positive (EUR193B) current account as of the end of 2010. Inflation has been fairly moderate at 2%, but we expect an increase as a result of the decline in the euro relative to the dollar.
German chancellor Angela Merkel continues to create tension with EU member states by pushing for ratification of changes to the Lisbon Treaty. The government insists that private investors bear more of the costs of further European bailouts. Note, the cost of the bailouts is likely to be absorbed via increased support for the EFSF, the ESM, the ECB and a rise in the number of euros. The fallout from a likely Greek default needs to be monitored.
via Egan-Jones
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It had to happen. Germany has unsustainable social programs and debt, just like Italy. But Germany is so dependent on exports (particularly autos) that a hiccup can crush them.
These days, you can replace Germany with any country in that statement (adjusting their primary export) and have a true statement.
JIT disaster, coming to an economy near you!
Nein!!!!!!!!!!!!!!!
Egan-Jones appears to be the only ratings agency worthy of the title. And for that they must be ridiculed and punished.
Consider them an early warning system. Their views become mainstream in 6-12 months time.
Germany will not be defeated a third time. I can promise you that!
-John
http://www.youtube.com/watch?v=ykKBw89VnX0
Lol! Unless Germany can import hundreds of thousands if not millions of unemployed young turks to fill the ranks of the Fourth Reich's Wehrmacht, it isn't going to happen. The birthrate here is amongst the lowest in the world, the Bundeswehr is being slashed down to about 100k, and since they have done away with the draft, there is a big problem even filling the 5k yearly recruiting quota. Germany may be able to raise another Volkssturm, but they are going to need walking sticks issued with their Heckler & Kochs.
I wonder how we ever exported autos before EUR
So it's all going according to plan then.
Any implosion really begins at the core, not the periphary, right?
Once the "German People" get "angry" and Merkel's options are politically limited (quite a predictable sequence, ne?)...
Perhaps on or around 20th March?
ori
/1460-days-ago
Maybe, some would argue end-of-Feb might already be interesting after 1-10trn "injection" happens.
In other news, I am an IT-pro and I really would like to see the ECB IT-stuff. Not about numbers in EUR or USD, a trillion is *nothing* in 64 or 128bit land. BUT the transactions/sec and bandwidth delivered.
Beware the ides of March...
Crisis SOLVED! Nothing to see here...move along....buy green stocks or get a bullet in the ear.
but..but.. Fitch said we are crisis-safe and keep AAA FOREVAR.
any why Bloomberg can print " confidence in Germany rebounds"
Who's Egan Jones, and where's the news?
A rating agency with more credibility than S&P, Moodys, and Fitch, because they get paid by Buyers of debt, not Issuers.
well, we're just going to have to change that straight away. Stray dogs get neutered or rehab.
I re-read the OP looking for /s
Not a peep about this downgrade being reported by ARD or ZDF. The politicians are blowing off all the recent downgrades as if it's all some kind of American effort to destroy the € and the EU. Egon Jones for most Germans sounds liike a british skeleton athlete they might see on Saturday mornings Wintersportschau. The few who know the deal are storming the bullion dealers buying das Phyzz.
I love Sean Egan!
Another downgrade and another round of backdoor ponzi to counter it. Green across the board. Egan rocks, but is no match (short term) for the power of the printer.
At this rate Sean Egan will only be welcome in Iceland.
Nope...he would downgrade them too. /sarc
Sean is way ahead of the game.
So, in light of the recent mass downgrades in zEuroland, this shud be wildly bullish for bunds. The worse it gets the better the performance type of idiocy def has dominated euro rates trading for quite some time. Make it single A and bunds drop to 1 %. Lol!
MAN we kicked Germanys ass AGAIN! Look at their wimpy 86% Debt/GDP ratio...lol, PUSSIES!
Try to beat USA's 107% Debt/GDP kraut suckin bitchez!
Which is known as a "strong dollar policy."
in other news they told us it's 79% - for accounting-stuff (once again)
you tell'em Sheepdog...made up numbers don't lie and that is a fact.
From math class back in the day...
http://www.amazon.com/How-Lie-Statistics-Darrell-Huff/dp/0393310728
The markets have turned into one great big socialist engineer's experiment.
In other rating agency "news", good ol Fitch throws the kitchen sink in it's crusade to maintain the illusion that all is well.
*FITCH 'S PARKER SAYS ITALY NOT A PERIPHERAL ECONOMY.
Funny, I read that headline and don't see any illusion at all. The point being that Italy is, perhaps, core and not periphery. (But I didn't bother to look at the article below the headline.)
When you can no longer borrow at zero, then you print (at less than zero).
There is no cost to printing money, right ? Ask the Bernank.
Who needs credit ratings when the electronic binary system can create wealth without working for it.
This downgrade will make a bunch of Krauts sour.
But I thought bad was good?
... at least Dr. Wolfgang Strangelove Scheuble ... the architect of the EU - ALDI whole & firesale Enterprise GmbH....
That might have had an adverse impact on the market except for the case that the Iran problem was taken care of and is off the table now.
All those carriers are out of there now, right?
Bad Germany! Bad!
AA- ...? This seems more like a slap on the wrist at the dinner table.
Green shoots everywhere I see...
“It is therefore natural that in a thoughtful age, when men are busy investigating present problems and curious in studying the past, convinced that no effect is without cause, the story of Rome should engage attention.”
WE Heitland, The Roman Fate, 1922
Eurozone aside
When will England get their 15 Minutes of fame?
When they threaten to shut off the hyper-hypothecation loop holes that serve to profit half of the US financial firms. So never.
Thought you knew...
Yup GM, there is England and then there is THE CITY and then CROWN CORP...
Big mysteries....
ori
Tyler , the computers don't care..they decided more people will book cruises on Priceline....Larry Summers will run the World Bank and solve all of the problems of the universe...lol
First Summers bk'd Harvard, then America ... then tomorrow, the world!! LOL!
Meanwhile, back at the ranch, the sheep graze quietly on.....
Moody to downgrade Commerzbank
http://www.reuters.com/article/2012/01/18/commerzbank-moodys-idUSL6E8CI0...
Sure glad none of this affects us and we are de coupled from the rest of the planet. Gives me that warm and fuzzy feeling.
lolol
If these ratings agencies would just cease downgrading sovereign nation debt ratings, maybe - JUST maybe - the equity markets would plummet.
Up=down.
I was surprised to see CNBC tweet that Egan-Jones downgraded Germany... I guess Egan-Jones is becoming one of the big boys now...
Or it fits with the storyline, so they ran with it.
terrorist! belligerent! enemy combatant! saboteur of finical safety and stability!
this man Sean must captured at once! his terrorist organization destroyed, razed to the ground and cast into oblivion! send in the drones, civilian casualties are acceptable (though we will not speak of them) as this is a war! a war for the fiat safety and security of the homeland.
He must be brought to bay for frighting the mass herds of sheep away from all things paper, for putting doubts in their culled minds, for only through strength, unity and unquestioning loyalty to the supreme power of printed paper do we flourish and thrive as a nation, a world, and race of civilized, collectivist beings. Join the collective in denouncing this evil, vitriolic usurper of our brave new world, to the deepest darkest dungeon with him, without trail, without due process, the sooner the better!
Render to Caesar, or pay the consequences. No pun intended.
In other news, the IMF wants a $500B handout.
http://apnews.myway.com//article/20120118/D9SBEK7G0.html
Why so little?
Even better the ponzi IMF will be asking for the money from the same countries they intend to hand it out to.
sure, all downgrades occur after euro markets close, euro markets shrug off all downgrades, all markets up the next day! all choreographed like a ballet!
EJ in the house.
Downgrade macht frei?
I'll bet Sarcozy feels better about this.
And still stock markets are rising...
DavidC
Germany downgraded. But who cares.
Euroland is about to give a shit on the rating agencies, which are anyhow just representing an opinion.
The only problem is, that huge institutional investors in Europe such as Allianz, Zuerich Financials etc have in their internal "laws" a paragraphe which deals with the quality of their investments. And here the opinions of the 3 big rating agencies do play a mayor role giving green light (or not) to invest in lets say the debt of France or the debt of Toyota.
But this is now changing: There is something in the making. I have read, that the "modus operandi" of an institution called "Stiftung Warentest" is serving as a blue print. ( "Stiftung Warentest" is a Public Foundation for the purpose to test all kind of tangible and intangible products) This foundation is located in Germany, operates highly succesful, is a very popular and trusted organisation, is operating since appx 40 years, is dealing with all kind of products. Including the rating of saving plans, combined life/capital insurances and some other products offered by local Finance Industry in Germany. Stiftung Warentest is in principle a consumer watchdog, well capitalized and very succesful. Their rating matters a lot in Germany. Producers and importers of all kind goods do fear their ratings.
I have read now on two occasions, that whether Stiftung Warentest should serve as the model for a new organization to act as a European Rating agency or , that Stiftung Warentest is extending somehow the range of their services, maybe direct or through an affiliate company or so). The "rating" of products offered by the Finance Industry was till now a relative small side line, mostly dealing with "products" offered by insurance industry.
One thing is clear, the opinions of independent, non-commercial rating agencies are badly needed and an organization similar to Stiftung Warentest would be much more objective than S&P for example.
Of course it takes some time to establish such an agency but in my opinion it is well manageable. There exists proven software for "rating" purposes which is used all over the world by auditors or institutional private equity investors. But to find in a short time the skilled personel in the numbers needed could be a limiting factor for the quick establishment of such an agency.