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Fitch Warns On US AAA Rating Amid Lack Of Fiscal Credibilty

Tyler Durden's picture




 

With Bernanke's speech dominated by the word 'Fiscal', is it any wonder that Fitch comes over-the-top with a warning, via Reuters and Bloomberg:

  • *FITCH SAYS WOULD CUT US AAA RATING IF THERE IS NO CREDIBLE FISCAL CONSOLIDATION PLAN IN 2013
  • *UK, FRANCE ,GERMANY, OTHER AAA NATIONS HAVE CREDIBLE PLANS:FITCH

Are the world's central bankers now checking back to the governments? Well we know how that will end. With the Fed's implicit tightening (as the balance sheet rolls down) and the fiscal cliff, it seems headwinds are mounting.

Bernanke's speech - FISCAL loud and clear...

and just as last year, USA CDS is front-running the adjustment in US Treasury spreads along the curve...

 

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Thu, 06/07/2012 - 10:15 | 2503465 GeneMarchbanks
GeneMarchbanks's picture

Oh-oh. Fitch you little French bitch.

Thu, 06/07/2012 - 10:15 | 2503473 SilverTree
SilverTree's picture

Fiscal Credibilty, HA what a joke.

Thu, 06/07/2012 - 10:17 | 2503489 Ethics Gradient
Ethics Gradient's picture

Indeed. Check France out....

Thu, 06/07/2012 - 10:22 | 2503519 Hugh_Jorgan
Hugh_Jorgan's picture

Yeah, let's hand out more Government pension money we don't have. Sweeeeet.

Thu, 06/07/2012 - 10:50 | 2503734 HoofHearted
HoofHearted's picture

Did Sean Egan take a position at Fitch?

Nah, Egan would have already downgraded and be warning of further.

Plus Fitch doesn't want lawsuits....but they just might get them anyway!

Thu, 06/07/2012 - 16:45 | 2505329 AldousHuxley
AldousHuxley's picture

Fitch lagging behind DaGong.

 

DaGong already rang the bell many moons ago...US rating is at A

Thu, 06/07/2012 - 11:41 | 2503985 Bolweevil
Bolweevil's picture

Plan:

http://www.nytimes.com/2012/06/07/world/europe/france-lowers-pension-age-to-60-for-some.html

that'll help

 

(I should read the thread first, sorry. see below)

Thu, 06/07/2012 - 10:48 | 2503711 Cast Iron Skillet
Cast Iron Skillet's picture

The French PLAN is credible, the plan! .... and I have a bridge that I could sell to Fitch ...

Thu, 06/07/2012 - 14:14 | 2504732 dpr10
dpr10's picture

haha french don't need to have a plan but own a rating agency named Fitch::)))yeah yeah like the uk's plan is a very credible one I say::)))

Thu, 06/07/2012 - 10:50 | 2503730 Doubleguns
Doubleguns's picture

Well, fitch is late.

Thu, 06/07/2012 - 10:15 | 2503466 transaccountin
transaccountin's picture

france has credible plan? ROFL!! They just lowered retirement age and made it harder to lay people off.

Thu, 06/07/2012 - 10:30 | 2503584 magpie
magpie's picture

Yeah, let"s get that flight to OATS safety going /sarc

Thu, 06/07/2012 - 10:15 | 2503467 Silver Bug
Silver Bug's picture

But the U.S has the best plan of all! QE to infinity!! /End Sarcasism

 

http://ericsprott.blogspot.ca/

Thu, 06/07/2012 - 10:15 | 2503468 Dr. Engali
Dr. Engali's picture

You lost me at "credible"

Thu, 06/07/2012 - 12:25 | 2504235 Nobody For President
Nobody For President's picture

Making you one word ahead of me.

Thu, 06/07/2012 - 10:15 | 2503469 junkyardjack
junkyardjack's picture

2011 Repeat bitchez!

Thu, 06/07/2012 - 10:21 | 2503513 agent default
agent default's picture

"UK, FRANCE ,GERMANY, OTHER AAA NATIONS HAVE CREDIBLE PLAN"

LOLOLOLOLOL

Thu, 06/07/2012 - 10:22 | 2503516 StackAttack
StackAttack's picture

Are the world's central bankers now checking back to the governments? I think this may be the case for the Fed. As bad as Bernanke is, I think he knows the inflation danger of QE forever and would prefer to avoid it. He has also warned Congress about the need for fiscal reform in the government. I think he is using the contraction of the Fed balance sheet to put pressure on the politicians to bring fiscal reform. Of course, he won't actually stop QE3 from going forward.  He just wants to do it while also getting the government to improve their errant ways.

I am not defending ChairSatan, by the way.  I just think that he doesn't realize he is ChairSatan and is trying to fix government problems.

Thu, 06/07/2012 - 10:23 | 2503527 StackAttack
StackAttack's picture

Oh, and I forgot to add that it won't work. The government fiscal cliff will not change.

Thu, 06/07/2012 - 10:24 | 2503537 Global Hunter
Global Hunter's picture

I wasn't even aware that Fitch still had the USA at AAA.  Way to stay ahead of the curve Fitch bwahahaha

Thu, 06/07/2012 - 10:24 | 2503542 RobotTrader
RobotTrader's picture

Gotta laugh at that.

Each time a downgrade is threatened, bond prices go through the roof.

5-yr. yield at .72%, 10-yr. at 1.65%

http://www.bloomberg.com/markets/rates-bonds/government-bonds/us/

Gimme a break, they'll have to downgrade this Fiatsco paper to "Junk" to make any serious dent in bond prices.

Thu, 06/07/2012 - 10:32 | 2503592 Global Hunter
Global Hunter's picture

You have been cynical the last day or so...I like it!

Thu, 06/07/2012 - 10:32 | 2503597 mayhem_korner
mayhem_korner's picture

Each time a downgrade is threatened, bond prices go through the roof.

 

That's just the puppet-masters testing the stupid meter.

Thu, 06/07/2012 - 10:40 | 2503661 ThirdWorldDude
ThirdWorldDude's picture

That's just the puppet-masters testing the sphygmomanometer.

 

There, fixed it for ya.

Thu, 06/07/2012 - 10:44 | 2503691 grey7beard
grey7beard's picture

>> There, fixed it for ya.

That one liner was funny the first few hundred times it was used but it's now approaching extreme lame territory. 

Thu, 06/07/2012 - 10:49 | 2503724 GMadScientist
GMadScientist's picture

Far be it from us to encroach on your native lands.

 

Thu, 06/07/2012 - 10:50 | 2503728 mayhem_korner
mayhem_korner's picture

 

 

FOCCTNROTFL (Fell off chair, coffee through nose ROTFL)!!!

Thu, 06/07/2012 - 10:26 | 2503543 Whoa Dammit
Whoa Dammit's picture

Haven't things been "fiscally consolidated" enough already? Almost all the money is with the 1% and Fitch thinks they need more. And I suppose the name for the new money stealling plan will be Oliver Twist.

Thu, 06/07/2012 - 10:27 | 2503545 Cognitive Dissonance
Cognitive Dissonance's picture

The only credible plan the severely credit addicted sovereign has is a plan to secure (much) more credit.

Thu, 06/07/2012 - 10:28 | 2503557 mayhem_korner
mayhem_korner's picture

FITCH SAYS WOULD CUT US AAA RATING IF THERE IS NO CREDIBLE FISCAL CONSOLIDATION PLAN IN 2013

 

I can see someone drudging up a smoldering scrap of paper embossed with that headline from the ruins of a zombie-infested, post-collapse street corner.  In 2013. 

Thu, 06/07/2012 - 10:29 | 2503570 StackAttack
StackAttack's picture

Does anyone know a cartoonist I can hire to draw a cartoon for me?  Here is what I picture:

A very wide clliff with a bus labeled 'USA' driving directly at it.  Two buses labeled 'Greece' and 'Spain' already crashed at the bottom of the ravine.  Another bus labeled 'Rest of Europe' in freefall toward Greece and Spain buses.  On the ground in front of the USA bus are two proposed paths.  The first path is labeled 'Obama' and veers slightly left before driving off the cliff.  The second path is labeled 'Romney' and veers slightly right before driving off the cliff.  On the top of the USA bus is Ron Paul hanging on for dear life and yelling "Hit the brakes!".

What do you ZHers think?

Thu, 06/07/2012 - 10:34 | 2503605 mayhem_korner
mayhem_korner's picture

 

 

Have you met WB7 and the Limerick King?

Thu, 06/07/2012 - 10:42 | 2503673 Village Smithy
Village Smithy's picture

Go for it. In the future we will not be "hiring" anyone to do anything we can do ourselves. Give it a try.

Thu, 06/07/2012 - 11:37 | 2503970 GMadScientist
GMadScientist's picture

http://postimage.org/image/obkbxg5xx/

Ask and ZH provides...free (and worth every penny ;)

 

Thu, 06/07/2012 - 17:32 | 2505432 Lux Fiat
Lux Fiat's picture

Years ago, there was an old, abandoned hulk of a bus left on the side of Route 1 in the Florida Keys.  Any item of value had long been stripped, including the tires, engine, etc.  Someone had spray painted on the side of it "Gone to get gas, be right back".  The situation in the EU kind of reminds me of that bus.  Many of the periphery countries are sitting around waiting on the bus for the gas to show up.

Thu, 06/07/2012 - 10:30 | 2503577 surf0766
surf0766's picture

"Lack Of Fiscal Credibilty" How about no credibility and no backbone to cut government spending dramatically and cut taxes.

Thu, 06/07/2012 - 10:49 | 2503725 mayhem_korner
mayhem_korner's picture

 

 

That thar comment just earned you the jack of spades on Barry's hit-list of terrorists...

Thu, 06/07/2012 - 10:51 | 2503735 pods
pods's picture

Most ratings agencies (Egan excluded) are like 3 years behind.  

So we have to have a plan for fiscal credibility?

Why not just aim for a budget?

pods

Thu, 06/07/2012 - 10:56 | 2503757 lolmao500
lolmao500's picture

*UK, FRANCE ,GERMANY, OTHER AAA NATIONS HAVE CREDIBLE PLANS:FITCH

UK and France have CREDIBLE plans??? Is Fitch high??

Thu, 06/07/2012 - 11:30 | 2503928 IBelieveInMagic
IBelieveInMagic's picture

Don't get your knickers in a twist -- it's just the rating agencies of each region threatening the other region about ratings downgrade. Of course at this point, none of them have any credibility and only someone waking up from a 20 year slumber would take any of this seriously.

Thu, 06/07/2012 - 10:59 | 2503765 ArrestBobRubin
ArrestBobRubin's picture

You let a BS Bernanke speak, your "fiscal credibility" takes a hit. 

It's pretty much scientific :-)

Thu, 06/07/2012 - 11:01 | 2503774 CrashisOptimistic
CrashisOptimistic's picture

In general, the credit rating agencies are the only thing standing between Congress and total undoing of the debt ceiling deal, extending the tax cuts (which defund Soc. Sec, btw) and avoiding 2013's recession.

The day the US lost AAA (S&P's rating), the 10 year was at 2.58%.

At first glance that looks like the rating has no power at all.  But that cut was done on a Friday and Treasury spent the weekend drafting instructions to Pension funds providing them cover not to trigger their charter mandates that require them to hold XX% of their money in AAA rated securities.  It was just one agency of 3 and Treasury let the funds reference that letter in their decision making.

If Moody's and Fitch slash AAA also, Treasury's letter won't work anymore.  That triggers forced selling of Treasuries.

Thu, 06/07/2012 - 11:37 | 2503973 Bolweevil
Bolweevil's picture

ou est le poulet fou

 

Thu, 06/07/2012 - 11:43 | 2503997 KandiRaverHipster
KandiRaverHipster's picture

YERPPPP! because downgrading the World's currency supplier makes so much sense. and like, no one realizes there is debt and keeps piling into more.

more BS. 

Thu, 06/07/2012 - 11:46 | 2504010 Mark123
Mark123's picture

Where is John Cleese when you really need him?

 

French Soldier: I don't want to talk to you no more, you empty headed animal food trough wiper. I fart in your general direction. Your mother was a hamster and your father smelt of elderberries.

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