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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+".

More here

 

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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:

http://www.thelocal.de/money/20120624-43347.html

 

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

Yes.

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

Schluckt.

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

And now the ratings nazis downgrade Germany...

 

Perfect.

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

Caa/B-

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?"

Baaaaaa

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

\EJ/

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

Yes.

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.

Tue, 06/26/2012 - 15:47 | 2562635 disabledvet
disabledvet's picture

Greece is leaving. "imminently." (not eminently however.)

Tue, 06/26/2012 - 20:24 | 2563387 Milestones
Milestones's picture

Germany should have left 3 months ago. Good grief Charlie Brown.                Milestones

Tue, 06/26/2012 - 17:05 | 2562888 DosZap
DosZap's picture

Greece isn't leaving, Germany is.

She has VOWED that Germany will not,will not as long as she is alive participate in the shared EU Bonds scheme.

Tue, 06/26/2012 - 15:03 | 2562464 Gene Parmesan
Gene Parmesan's picture

Better late than never.

Tue, 06/26/2012 - 15:04 | 2562468 nobusiness
nobusiness's picture

When a downgrade of Germany the only country with money in the EU makes the SPY go down 0$.35 you know the end of quarter fix is in.  If you are short, you better cover now.  Market should open up 10 S&P points tomorrow and end the week at S&P 1350 without working up a sweat.

Tue, 06/26/2012 - 15:31 | 2562579 you enjoy myself
you enjoy myself's picture

i was thinking its due more to the modern era rule that the market can't go down 2 days in a row.  there hasn't been a safer bet over the last 3 years than to just go long SPY at the close of a single down day.

Tue, 06/26/2012 - 15:04 | 2562470 yogibear
yogibear's picture

And coming soon the US needs to be downgraded a couple of notches.

Tue, 06/26/2012 - 15:08 | 2562485 MayIMommaDogFac...
MayIMommaDogFace2theBananaPatch's picture

Cue the mashup with the movie of Hitler in the bunker screaming at his men -- with Egan Jones as the object of his scorn in the subtitles.

In 3, 2, 1.

Tue, 06/26/2012 - 15:10 | 2562495 Robot Traders Mom
Robot Traders Mom's picture

Excellent idea.

 

If I knew how to do more on a computer than just download MILF porn, I would do it myself.

Tue, 06/26/2012 - 15:12 | 2562513 MayIMommaDogFac...
MayIMommaDogFace2theBananaPatch's picture

There's MILF porn on ZH?  Where?!??

Tue, 06/26/2012 - 15:19 | 2562535 SokPOTUS
SokPOTUS's picture

Snorgtees ads.

Tue, 06/26/2012 - 15:21 | 2562547 Seasmoke
Seasmoke's picture

those chicks are pumping out babies already ??

Tue, 06/26/2012 - 15:17 | 2562529 JR
JR's picture

Well, at least Hitler never outsourced German jobs and industries to Third World countries. That had to be left to the Allies. And he did prophesy correctly that if Great Britain rejected his peace offers the British Empire would vanish.

Tue, 06/26/2012 - 16:15 | 2562729 WestVillageIdiot
WestVillageIdiot's picture

Yeah, Hitler was sure a champion of workers' rights.  Did you notice the massive amounts of slave labor that Germany used during WWII?  Something tells me that this was not just done for morale but had something to do with keeping down pay scales.  Hitler was no free market guy. 

Tue, 06/26/2012 - 15:09 | 2562491 Waterfallsparkles
Waterfallsparkles's picture

Seems like every time the Market gets a little steam Egan Jones comes in and Downgrades a Country.

Makes you wonder if they are Short the Market and everytime they start to lose money they Downgrade someone.

Tue, 06/26/2012 - 15:10 | 2562503 Gene Parmesan
Gene Parmesan's picture

No, it doesn't.

Tue, 06/26/2012 - 15:31 | 2562571 Rick Blaine
Rick Blaine's picture

Well, possibly...

However, that would imply that Europe as a whole isn't really completely "screwed" (i.e., the day when they really have to start living within their means has arrived)...

...and Egan Jones, and any other entity/person (e.g., Kyle Bass), claiming that this is all just a big "ponzi-three card monte-smoke/mirrors-BS" game are completely full of it...and they are ONLY claiming such to manipulate the market or something...

We'll see how it really plays out, but based on what's happened over the last year or two, my money is on 1. the "ponzi...BS" scenario being the correct answer (at least in Europe...for NOW)...and 2. the ratings agencies are actually doing their jobs now.

Tue, 06/26/2012 - 15:12 | 2562507 Euro Monster
Euro Monster's picture

Egan Jones the new Judge Dredd... lol

Tue, 06/26/2012 - 15:15 | 2562515 yogibear
yogibear's picture

"If I knew how to do more on a computer than just download MILF porn, I would do it myself."

 

Are you with the U.S. Securities and Exchange Commission?

Tue, 06/26/2012 - 16:54 | 2562862 CaptainObvious
CaptainObvious's picture

No, he's actually with the General Services Administration.

Tue, 06/26/2012 - 15:26 | 2562564 Yellowhoard
Yellowhoard's picture

Germany has just released this official response to the Egan Jones downgrade.

"lalalalalalalalalalala I can't hear you lalalalalalalalalalalal"

When pressed for clarification, Angela Merkal replied, "I know you are but what am I."

Tue, 06/26/2012 - 15:30 | 2562572 Conman
Conman's picture

Ratings, smatings, they are rating themselves now you remeber? Spiderman towels are rated AAA++++

Tue, 06/26/2012 - 15:30 | 2562576 Joe A
Joe A's picture

US has AA+ rating. As if...

Tue, 06/26/2012 - 15:30 | 2562577 Imminent Collapse
Imminent Collapse's picture

The EU doesn't recognize rating agencies anymore, they rate themselves and then rejoice at their solvency. 

Tue, 06/26/2012 - 15:33 | 2562589 The Reich
Tue, 06/26/2012 - 15:36 | 2562595 lotusblue
lotusblue's picture

My god! This should be rocking the market for %10-15 selloff!

Apathy has invaded financial world.The end is Nigh.

Tue, 06/26/2012 - 15:36 | 2562599 100pcDredge
100pcDredge's picture

Ehm... maybe this was not clear yet... but I think the Europeans don't do ratings anymore.

They have different rules now.

 

Tue, 06/26/2012 - 15:48 | 2562640 SmoothCoolSmoke
SmoothCoolSmoke's picture

The time to short is very close.  Here is my take on it:

1. Today/Wed, manip up to get to...
2. SCOTUS pop on HC, to get to....
3. Weekend, to get to......
4. Super low vol (easy to manip) July 4 week, to get to...
5. Big slide down starting 7/9, to get to......
6. 1170, to get to......
7. QE3.

 

Tue, 06/26/2012 - 16:14 | 2562728 RoadKill
RoadKill's picture

IMO you are being too cute.  Its very hard to call a generic market bottom or top, trying to be that exact makes it impossible.  IMO the best thing to do is have strong position limits around different points of a trading range.  At 1,450 I'm happy to be 100% short.  At 1,150 I want to be market neutral.  So at 1,325 I'm around 75% short.  Below 1,000 I want to be long.  When the market goes up, you short more.  When it goes down you take some off.  Its about hitting lots of singles rather then a home run.

Tue, 06/26/2012 - 15:49 | 2562645 hellas4life
hellas4life's picture

how are we going to do that?  BANKRUPTCY

Tue, 06/26/2012 - 15:57 | 2562671 RoadKill
RoadKill's picture

Wait is there a vote involved?

I thought any major decision making had to get a 17-0 apporoval from the respective legislatures.

If Italy, France and Spain can just vote for Germany to be on the hook for an unlimited number of Euro-bonds, then Berlin we have a problem.

I think Egan got this one severely wrong. In order to downgrade Germany you have to make the call that Merkle is a little bitch and she and the Bundestag will let themselves be seduced by Monti and Hollande and Rajoy. If Hollande Monti and Rajoy could simply vote themselves German money tgis would be a totally different situation.

Shame on you Egan. THIS IS A BASIC FACT and you have to get the basics right if you want to be listened to.

Tue, 06/26/2012 - 16:13 | 2562719 Lore
Lore's picture

This will be construed as USD-bullish. (Pffft.)

Egan-Jones is based in Haverford, PA (USA).

Anybody foresee a rating downgrade for the SWIFT system?

Tue, 06/26/2012 - 16:34 | 2562795 Fish Gone Bad
Fish Gone Bad's picture

If Ilsa were here, she would fix everything (http://www.youtube.com/watch?v=ZCdfbKRw9Qk)

Tue, 06/26/2012 - 17:29 | 2562956 fiddy pence haf...
fiddy pence haff pound's picture

It's been decided that Egan will be ignored.

What I can't understand is how Moody's decided to take

down British banks. I thought the conspiracy had decided

not to touch London banks because they're horribly

wobbly and the very eye of the offshoring, no holds barred

"banking" casino.

As you can see, one small arms shot across the bow at

RBS and they've already shat themselves.

How will they try to patch this up, I wonder? The central banks, that is.

This will affect liquidity! AHAhahaahAHhaahAHahah

Tue, 06/26/2012 - 17:47 | 2563023 dreadnaught
dreadnaught's picture

nobody read of the ongoing worldwide bank hack going on now? 

http://news.sky.com/story/952931/fraud-ring-in-hacking-attack-on-60-banks

 

wonder if this house of cards can last until 4th of July even?

Tue, 06/26/2012 - 18:07 | 2563070 Motorhead
Motorhead's picture

Fuck man, I sure hope the price of a Mass at Oktoberfest doesn't go up 10 cents.  Otherwise, I'm still going.  Prost!

Tue, 06/26/2012 - 19:17 | 2563193 NuYawkFrankie
NuYawkFrankie's picture

Re Egan Jones Downgrades The Fatherland

 

Just got back from walking the dog. While he was takin a dump on the neighbours lawn, I looked up  to see where that unfamiliar whining sound was comin from and whaddyknow -  a whole squadron of Stukas approaching Egan Jones HQ!

Have I just witnessed the outbreak of WW3?  OMG!!!

Tue, 06/26/2012 - 19:17 | 2563233 magpie
magpie's picture

I always thought Obama could use the courtesy phone anytime and order the Gnomes of Zurich to dump Bunds and the Euro would be...gone. 

Tue, 06/26/2012 - 19:22 | 2563246 BudFox2012
BudFox2012's picture

How does Egan manage to stay afloat?  I figured they would have had a gas leak blow up their offices by now (as a drone is seen flying away from the scene).

Or maybe we are just so fucked they really don't care what anyone says because its too late anyway...

Tue, 06/26/2012 - 21:26 | 2563561 Goatboy
Goatboy's picture

Anyone knows where to find EJ countries credit ratings list?

Tue, 06/26/2012 - 21:46 | 2563617 newengland
newengland's picture

Germany cannot afford to  bail out Europe. End of.

Merkel knows this. So does the Fed, and the BIS.

Tue, 06/26/2012 - 22:14 | 2563699 illyia
illyia's picture

You go Egan Jones! Rah.

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