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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capitallosses's picture

Slowly catching up with reality

Xibalba's picture

bull up?  or bull shit?

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?

ChubbNut's picture

Stop trying to be clever.

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.

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?


brooklynlou's picture

Wasnt that JPM's london whale bet?

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.

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.

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.  ;)

Heavy's picture

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

Harlequin001's picture

Me too.

'the fig tree who not bears fruit,'

Knukles, WTF...

ChubbNut's picture

Stop trying to be clever.

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..... ;)

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.

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.

YesWeKahn's picture

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

Hippocratic Oaf's picture

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

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.?

Village Smithy's picture

Bill Gross just became very excited.

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."

Stuart's picture

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

Robot Traders Mom's picture

And now the ratings nazis downgrade Germany...



Dr. Kananga's picture

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

Dr. Kananga's picture

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

pleseus's picture

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

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.

resurger's picture

 Short The Fucking Top

fonzannoon's picture

Where does he rate the USA?

distopiandreamboy's picture

End of the quarter window dressing

Dr. Engali's picture

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

Seasmoke's picture

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

lolmao500's picture

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

billybobtx's picture

Angela just let a huge wet bubbly queef...

cougar_w's picture

Not during lunch, please.

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?


Vincent Vega's picture

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

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.

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.

devo's picture

Greece isn't leaving, Germany is.