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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+".

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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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