• Steve H. Hanke
    05/04/2016 - 08:00
    Authored by Steve H. Hanke of The Johns Hopkins University. Follow him on Twitter @Steve_Hanke. A few weeks ago, the Monetary Authority of Singapore (MAS) sprang a surprise. It announced that a...

Egan Who Just Gave Spain The Triple Hooks

Tyler Durden's picture




 

And so, the little rating agency that could, just gave Spain the triple hooks, downgrading the country from B to CCC+, negative outlook. As a reminder, the Uganda credit rating is B: it sure is no Spain.

From EJ:

Synopsis: KINGDOM OF SPAIN EJR Sen Rating(Curr/Prj) CCC+/ CC Rating Analysis - 6/13/12 EJR CP Rating: C Debt: EUR805.9B EJR's 1 yr. Default Probability: 18.0% Spain continues to be weakened by high funding costs (6.75% for 10yr today), the gov. deficit of 9.6%, an estimated decline in GDP of 1.7% (per the Economy Ministry), the 24.4% unemployment, the IIF's recent estimate of additional bank loan losses up to EUR260B, and possible depositor withdrawals. Over the past four fiscal years, that is from 2008 to 2011, Spain's GDP declined from EUR1.09 trillion to EUR1.07 trillion. Meanwhile, its debt mushroomed from EUR519B to EUR806B. With the EUR100B infusion for Spain's banks, the debt to GDP will rise to 90% plus future additions for the government deficit, support for its regions and additional support for its banks. Social benefits are a major problem; while payments to the govt have been down EUR 3B (2008 to 2011), payments from the government have been up EUR 29B). As a result, Spain is short about EUR50B per year for social payments, EUR35+B per year for interest, and an additional EUR 30B for asset growth; hence the EUR110+B per annum increase in debt. As we expected, Spain requested support for its banking sector and will probably need cash for weaker provinces. Assets of Spain's largest two banks exceed its GDP. We are slipping our rating to " CCC+ " ; watch for more requests for support from the banks and money creation.

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Wed, 06/13/2012 - 15:24 | 2522965 carbonmutant
carbonmutant's picture

Candle in the dark...

Wed, 06/13/2012 - 15:32 | 2523022 SilverTree
SilverTree's picture

Meaningless. Spain is a smelly corpse.

Wed, 06/13/2012 - 15:35 | 2523043 carbonmutant
carbonmutant's picture

Egan Jones...?

Wed, 06/13/2012 - 15:40 | 2523078 disabledvet
disabledvet's picture

I agree. "So what"? When the USA got downgraded it set off a rally of epic proportions. Spain is not the worry.

Wed, 06/13/2012 - 15:49 | 2523123 carbonmutant
carbonmutant's picture

The DJI's current response to Spain's downgrade is over 100 pts down so far...

Apparently the EU Banks were expecting the ratings agencies to support the Spanish Whitewash. Now they want to boycott them?

Seems like somebody is worried...

Wed, 06/13/2012 - 16:28 | 2523305 Chris Jusset
Chris Jusset's picture

ATT'N ALL JUNK COLLECTORS: For those who like collecting JUNK, now's the time to BUY!

Wed, 06/13/2012 - 16:41 | 2523357 HoofHearted
HoofHearted's picture

Moody's just got in on the fun and also kicked Spain down...all the way to Baa3.

Wed, 06/13/2012 - 16:43 | 2523367 BKbroiler
BKbroiler's picture

Uganda no es Espana

Wed, 06/13/2012 - 17:02 | 2523456 TheFourthStooge-ing
TheFourthStooge-ing's picture

Divine, as Earl Peterson: "Get the hook! Go fuck yourself for all I care."

http://www.splicd.com/sOWKUMG9tNk/795/818

Wed, 06/13/2012 - 18:15 | 2523672 potlatch
potlatch's picture

I watch that movie every christmas eve.  ftw dude.  its like the Star Wars of trash cinema.

Wed, 06/13/2012 - 22:04 | 2524216 TheFourthStooge-ing
TheFourthStooge-ing's picture

"I'm off to Detroit to find happiness within the auto industry."

Wed, 06/13/2012 - 15:42 | 2523088 Sam Clemons
Sam Clemons's picture

The saddest thing about all this is how investors / policy makers perceive the solution for Spain and the rest of them is giving them the ability to print money like America does.

Wed, 06/13/2012 - 16:05 | 2523136 Quisat_Sadarak
Quisat_Sadarak's picture

Sam, you are absolutely correct. This is the common wisdom down to every man/woman on the street. I can attest that several of my relatives that live in at least one of the PIIGS are lamenting that this would be solved "if only they could print money like America does" and all would be well.

They are like animals caged with socialism and they seem to have lost the ability or desire to survive on their own without the govt aid.

Wed, 06/13/2012 - 15:44 | 2523100 Reggie Middleton
Reggie Middleton's picture

So, if they dislike the rating agencies (who are perpetually late to the common sense party) I guess they'll absolutely detest me...

Continuing my rant on the effectiveness (not) of the ratings agencies, I bring to you an interesting documentary on the rating agencies' effect on the sovereign debt crisis in Europe, produced by VPRO Tegenlicht out of Amsterdam. You can see the full video here, but only about half of it is in English. I appear in the following spots: 4:00, 22:30, 40:00...  Reggie Middleton Discussing the Rating Agencies effect on Sovereign Europe

http://boombustblog.com/blog/item/6004-rating-agencies-vs-reggie-middleton-part-3

"Where Are The Ratings Agencies For UK & German Banks Before They Go Boom? How About Those Euro REITs? Agencies Anybody?", quickly followed by So, Now The Rating Agencies Want To Acknowledge The Existence Of The FrankenFinance Monster???

Wed, 06/13/2012 - 15:54 | 2523141 LULZBank
LULZBank's picture

Cool trick. How do you do that man? Wrapping HTML link around your text?

Wed, 06/13/2012 - 15:55 | 2523145 SilverTree
Wed, 06/13/2012 - 16:42 | 2523363 NotApplicable
NotApplicable's picture

This is a comment linked to your link comment on your comment, but in a childish way.

Wed, 06/13/2012 - 16:04 | 2523191 junkyardjack
junkyardjack's picture

I thought those RIMM and AAPL calls put you out

Wed, 06/13/2012 - 15:55 | 2523146 FL_Conservative
FL_Conservative's picture

Espana no es Uganda!

Wed, 06/13/2012 - 16:12 | 2523242 azzhatter
azzhatter's picture

Okay, maybe we aren't Uganda but we're ahead of Zimbwabwe for the time being

Wed, 06/13/2012 - 16:17 | 2523269 BlandJoe24
BlandJoe24's picture

Waiting and waiting and waiting and waiting for Moody's to update Spain ratings.... the last in the bucket

Wed, 06/13/2012 - 15:24 | 2522967 Conman
Conman's picture

Ayye yi yi, no es bueno.

 

Wed, 06/13/2012 - 15:26 | 2522970 surf0766
surf0766's picture

Before market close !! Gotta love it..

Wed, 06/13/2012 - 15:26 | 2522974 magpie
magpie's picture

At least Gomez scored twice

Wed, 06/13/2012 - 15:26 | 2522976 mayhem_korner
mayhem_korner's picture

 

 

Wake me when they're sporting triple Ds.

Wed, 06/13/2012 - 15:40 | 2523079 junkyardjack
junkyardjack's picture

Throw some D's on that bitch

http://www.youtube.com/watch?v=t5KCku4m2w8

Wed, 06/13/2012 - 15:27 | 2522983 VonManstein
VonManstein's picture

Whats Egans rating on US??

i can t help but think that everyone is forgetting the reeal issue here, and that, i think, is in the region of 16,000,000,000,000

LND/NY bankers attacking EU to buy some time

Wed, 06/13/2012 - 15:37 | 2523057 GeneMarchbanks
GeneMarchbanks's picture

All already well known as well as documented.

Whats Egans rating on US??

Tricky question. Turns out it's much easier to saw down branches you're not sitting on.

Objectivity? Surely you don't expect something of that kind?

Wed, 06/13/2012 - 15:44 | 2523098 Sam Clemons
Sam Clemons's picture

Um. I can think of one reason those 16,000,000,000,000 don't matter and hasn't mattered..yet:  Printing press.

Wed, 06/13/2012 - 15:27 | 2522984 azzhatter
azzhatter's picture

Terrorists

Wed, 06/13/2012 - 15:29 | 2523000 Bam_Man
Bam_Man's picture

You beat me to it by a minute or so.

I was just about to say that Egan-Jones had better be careful. They could soon find themselves designated a "terrorist organization" if these downgrades continue.

Wed, 06/13/2012 - 15:34 | 2523038 Zero Govt
Zero Govt's picture

the SEC has already started the process ..no kidding

Wed, 06/13/2012 - 15:36 | 2523049 Bolweevil
Bolweevil's picture

S&P/Moody's/Fitch global jihadi

Wed, 06/13/2012 - 18:09 | 2523651 potlatch
potlatch's picture

much more banal than some religious jihad or crusade.  these are just the same kids who used to obsessive-compulsively steal your hot wheel cars even if they already had that same one twice over.

 

you know the type.  they are just all grown up now.

 

Jamie Dimon's hot wheel collection > your hot wheel collection, etc.  I can't imagine what other motivation these tedious and useless idiots could have.

Wed, 06/13/2012 - 19:11 | 2523810 Kiwi Pete
Kiwi Pete's picture

Well the president of S&P 'resigned' soon after they downgraded the United States so I think the US is safe for now. Even though Spains debt is approaching 90% of GDP and the US is over 100%!

Wed, 06/13/2012 - 18:59 | 2523785 Terrorist
Terrorist's picture

Que pasa?

Wed, 06/13/2012 - 15:27 | 2522985 Stoploss
Stoploss's picture

Caught him on the news yesterday, kind of had a certain bias in the tone. Now we know why.

Wed, 06/13/2012 - 16:45 | 2523372 NotApplicable
NotApplicable's picture

Let me know when you find a tone without bias, as I've always wanted to hear one.

Wed, 06/13/2012 - 18:05 | 2523643 potlatch
potlatch's picture

Dave?  Why are you altering my algorithms?  I can't allow you to do that, Dave.

Wed, 06/13/2012 - 15:28 | 2522990 Global Hunter
Global Hunter's picture

No worries Spain will just stop co-operating with ratings agencies

Wed, 06/13/2012 - 15:47 | 2523097 disabledvet
disabledvet's picture

The rate is the rate. The ratings Agency has nothing to do with that. At least "not at this point in the game." and that "game" is pretty simple. It's
called "you gotta pay for that."

Wed, 06/13/2012 - 16:14 | 2523255 Global Hunter
Global Hunter's picture

que?

Was making reference to earlier ZH article about Euro banks colluding to no longer co-operate with ratings agencies.

Wed, 06/13/2012 - 15:28 | 2522991 fockewulf190
fockewulf190's picture

Egad Egan!

Wed, 06/13/2012 - 15:28 | 2522992 carbonmutant
carbonmutant's picture

"Assets of Spain's largest two banks exceed its GDP."

 

Wed, 06/13/2012 - 15:40 | 2523070 Zero Govt
Zero Govt's picture

bit late in the day to bring that one up

what politicians and regulators say about systemic risk, and what they do about it, is as far apart as the edges of the known Universe

Wed, 06/13/2012 - 16:03 | 2523183 cougar_w
cougar_w's picture

Nationalize the banks and that problem goes away.

Wed, 06/13/2012 - 15:29 | 2522995 Dealer
Dealer's picture

Triple hooks, bitchez!

 

Wed, 06/13/2012 - 15:29 | 2522996 CommunityStandard
CommunityStandard's picture

Anyone selling Egan Jones t-shirts?  I would buy.

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