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Friday Dump Complete: Moody's Warns Of Spanish Downgrade, Threatens AAA-Countries In Case Of Grexit
First we got Spain miraculously announcing late at night local time, but certainly after close of market US time, that the bailout so many algorithms had taken for granted in ramping stocks into the close may not be coming, because, picture this, Germany may have conditions when bailing the broke country's banks out, and Spain is just not cool with that, and now, after the close of FX and futures trading, we get Moody's giving us the warning the after Egan-Jones, S&P, and Fitch, it is now its turn to cut the Spanish A3 rating."As Spain moves closer to the need for direct external support from its European partners, the increased risk to the country's creditors may prompt further rating actions. The official estimates of recapitalising Spain's banking system have risen significantly and the country's indirect reliance on European Central Bank (ECB) funding via its banks has been growing. Moody's is assessing the implications of these increased pressures and will take any rating actions necessary to reflect the risk to Spanish government creditors. Moody's rating on Spain is currently A3 with a negative outlook." Moody's also warns, what everyone has known for about 2 years now, that Italy could be next: "However, Spain's banking problem is largely specific to the country and is not likely to be a major source of contagion to other euro area countries, except for Italy, which likewise has a growing funding reliance on the ECB through its banks." Of course none of this is unexpected. What will be, however, to the market, is when all 3 rating agencies have Spain at BBB+ or below, which as ZH first pointed out at the end of April will result in a 5% increase in repo haircuts on Spanish Government Bonds, resulting in yet another epic collateral squeeze for the country which already is forced to pledge Spiderman towels to the central bank.
From Moody's
Moody's: Developments in Spain, Greece may prompt euro area sovereign rating downgrades
New York, June 08, 2012 -- Recent developments in Spain and Greece could lead to rating reviews and actions on many of the euro area countries, says Moody's Investors Service in the report "Rating Euro Area Governments Through Extraordinary Times -- Implications of Spain's bank recapitalisation needs and the rising risk of a Greek Exit".
As Spain moves closer to the need for direct external support from its European partners, the increased risk to the country's creditors may prompt further rating actions. The official estimates of recapitalising Spain's banking system have risen significantly and the country's indirect reliance on European Central Bank (ECB) funding via its banks has been growing. Moody's is assessing the implications of these increased pressures and will take any rating actions necessary to reflect the risk to Spanish government creditors. Moody's rating on Spain is currently A3 with a negative outlook.
However, Spain's banking problem is largely specific to the country and is not likely to be a major source of contagion to other euro area countries, except for Italy, which likewise has a growing funding reliance on the ECB through its banks.
In contrast, Moody's says that if the risk of a Greek exit from the euro were to rise further, it could lead to additional rating pressures throughout the region. Greece's exit from the euro would lead to substantial losses for investors in Greek securities, both directly as a result of the redenomination and indirectly as a result of the severe macroeconomic dislocation that would likely follow. It could also pose a threat to the euro's continued existence.
The risk of a Greek exit particularly affects the credit standing of Cyprus (Ba1, Negative), Portugal (Ba3, Negative), Ireland (Ba1, Negative), Italy (A3, Negative) and Spain. However, should Greece leave the euro, posing a threat to the euro's continued existence, Moody's would review all euro area sovereign ratings, including those of the Aaa nations.
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Fuck you Bernanke!
Good thing there is no risk of default..
anywhere.. at any time.. for any reason..
including no real money left anywhere..
plenty of caca de toro chips to post as collateral.
and the sick charade continues
As long as Germany keeps paying the band the dance continues ...
Gold alert from Sprott: http://www.planbeconomics.com/2012/06/08/gold-alert-from-sprott/
Moody's sure getting real PMessy here lately.
Spain is a perfect example of a Euro currency model that doesn't work for them, as was predicted.
Just look at them now.
Ugh..... http://annoyanidiot.blogspot.com
"M&M alert from the M&M guy's":
http://www.youtube.com/watch?feature=player_detailpage&v=jYlHz8L5yeg
Alert me when Eric Sprott say's "buy a house in the Tortugas."
All the "real money" has been, and continues to be, stuffed into tax havens.
But "real money" is an oxymoron.
No amount of zeroes in the Caymans will save the likes of Mittens in the collapse.
All of the "so called" "real money". There fixed it.
Those are strong words. You must have been lined up short.
Anyway, your sentiment itself is bearish, so stay put and see what happens.
Spain doesn't want to be humiliated, but yet over the course of the economic contagion they kept saying everything is fine nothing to worry about. They need to eat some humble pie.
Spain, just suck it up and strap the red gag ball on. Trust me, Greece didn't spit on it much ...
It looks like a race 2 the bottom between Greece & Spain. I'll have 2 give it 2 Greece as they're used 2 coming from behind.
Fuck you, Rand.
Fuck you, rand()
[FIFY]
Moodys is owned by Warner Buffert and Charlie Mung-man. They are fe***hing each other in the bath.
its all coordinated to keep markets up, don't fight the central planning......stay long or get squeezed
It's all Bullshit!
i think the Moody's warning is to put extra pressure on all parties of this weekend's Euro summit so they come up with something "positive"....to buy more time...put off the pain....Which would be bullish for Monday...
but i'm just guessing
good guess!! :) I wouldn't prepare the popcorn for Monday ...I would get ready with the skittles...
My question is why didn't Moody's just go ahead and downgrade Spain...heck they are already late for the party...unless of course it is merely smoke and mirrors.
actual downgrade = done deal, margin/collateral hikes from ECB (see Tyler's explanation of what happens when all the ratings agencies drop below BBB) -> high percentage quick Spain collapse
warning of downgrade = "come up with something this weekend!!!.... or else..."
thats right! IMO Moody's at this point is merely drama or else they would have been in there earlier to downgrade. Extend and Pretend a little longer with meetings, plans of more meetings, summits...kick...kick...kick...a little further. Throw out non definative action phrases to pump...pump...pump the "market".
(or at least, better time your shorts...)
I hear stories hourly on the radio and TV about how American jobs depend on Europe not crashing. The sheeple are being conditioned for the massive printing that is a few weeks away, because if we don't we will all lose our jobs. $6 gas, $5 bread? That's the price we Americans willhave to pay so that we can keep our jobs (like we export so much stuff to Europe).
Ben pretty much said it on Thursday. QE is off the table, but if Europe explodes, "we have the tools".
* Rand Paul to visit EU, fix everything
the dump pump and hump
gloom & doom from loonieToonz
"This is a fucking shithole
The assholes I hang out with.
I can't believe them sometimes.
Everybody has to dump on somebody!
Nobody can do it straight, right?
My pa gets dumped on at work,
so he dumps on my mother.
The spics dump on us,
so we have to dump on them.
Everybody's dumping on everybody.
Even the humping is dumping"
~Tony Manero - SATURDAY NIGHT FEVER
+1
one of my all time fav quotes
Now people are dumping on Travolta, his toupes and his gayness.
I can't believe they are pledging the towels. I had planned on opening an account on Monday to get one, now the ECB gets them all. Life is not fair.
I want one of those towels! How about an ambitious Zero Hedger cornering the market on them. I pledge in advance to pay $50.00 for a genuine Spanish Spiderman towel (hopefully big enough to take to the beach this summer).
Moody's, lulz
Obama and Monti both mouthing warnings today. Probably not a coincidence.
Obama didn't mouth a warning, he told you Spain will get a bank bailout. Market understood this and rallied. It was pretty clear. I can't understand why people weren't getting this earlier.
they just don't have your experience on zH?
I think Harold is looking to play the markets. Personally, I am more interested in how "they" are playing us.
he may learn to turn, but he seems to be just trying to out-robo robo with the trollery and certainty
just anther troll; maybe created by zH itself, as many must be, at this point...
You think Harold & The Trolls is a product courtesy of ZH's Auto Immune Deficiency?
Why, that explains a lot! :)
Key here is that markets no longer serve as the signals they once did. Nearly all is manipulated to the extent possible. So value shifts to watching the tactics of the manipulators. Why a change in approach?
As we are now moved more by some deliberate purpose, one can also watch for intent, etc. Those mirror neurons come in handy.
We can hope this is true. Since the mirroring neural system is largely absent in sociopaths the majority of wall street traders will be unable to use that technique. It fact that may explain why there are so many momos out there, they are unable to get inside the minds of the manipulators so momo is all they have left.
Btw, "mouthing" would imply a level of insincerity.
Lot of us did get it......but akin to 2000 1st and 2nd quarter....lots also are not getting sucked into this Polyanna rally....
short term wrong...longer term..,..down.
only the tao itself is truly coincidental...
you look like you're in the mood...
So S&P 1400 by - what, the 20th, then?
Is this bullish, or is it just me? And, by "me", I mean pointless?
Pssss, take the money and shut up.
Ben
Key sentence here (not in bold in your post, oddly): However, Spain's banking problem is largely specific to the country and is not likely to be a major source of contagion to other euro area countries, except for Italy, which likewise has a growing funding reliance on the ECB through its banks.
Market will like that sentence and is fully expecting another downgrade. Market is also expecting really poor data from China. So when Chinese data is bad, Spain gets a mention of a possible bailout on Saturday and come Monday, market rallies big at the open.
You're missing the bigger picture. This is clearly bad news, which should send the market lower. Since that would surely trigger more QE it's good news. So in the new reality bad news is good news making the market go up, and being contrarian is a contrarian indicator.
No, I'm not missing the bigger picture. That's exactly what I'm seeing and why the market will like all of this "bad" news come Monday morning. We all know the market loves some QE and this puts more of it on the table. Look at SPY AH, it's up. Sure it's Friday AH in a really thin market but it does give you some indication of what the market thinks of all of this "bad" news - Spain, China, Greece, downgrades, etc.
Hey, I was joking, but it's only funny because it's true. Only in the current environment can bad news cause equities to rally and the stock market plunging make it go up.
".....sure, it was the second lowest volume day of the year, and the lowest volume week of the year, but SPY is up AH...and as we all know, it's perfectly logical and fundamentally sound for the equity market to price in the utmost, best case scenario (even when Gold and Oil are down)...what's wrong with you rubes? Don't you get the game? Buy everything..."
Correctamundo.....me can see nothing but the when-bet on the central banks, all else is a mountain of unpredictable shit.
dude! you've been here less that a month and you have less than 1 page of posts!
robo_t you ain't
i agree the close today was bullish and positive
but today is over; and: the market isn't real; and it certainly isn't trading on news or even rumors of what you call QE; or even news about downgrades
it is trading (?) on fiat banksterism and it is
that is all... buh-bye, now!
My theory is that right now, with the printing presses taking a break, it's trading on technicals. It's all 200 day moving averages, fibonacci retracements, MACDs, TRINs, oversold and over bought indications, correlations, trends and countertrends. It's algos trying to play other traders. Most importantly it is reacting to every little statement and headline as in indicator of what other traders will do. It's not about the news any more, it's about what other traders will read into the news.
"It's not about the news any more, it's about what other traders will read into the news."
Clarifying - thanks.
These RAs are so transparent it's almost funny .... the Modern Eco-Hit-Men .
The important thing is that the US extend the Bush tax cuts repeal the automatic spending cuts and increase borrowing and spending so we can grow our way out. Otherwise they may downgrade us. Unfuckingreal.
"Germany may have conditions when bailing the broke country's banks out, and Spain is just not cool with that"
Sure, I come to Zero Hedge for the accurate information hard to get anywhere else - but I stay for "can you believe this shit?" attitude.
A woman contacted me Re ; Your wife HD. Would you like me to forward the email? I can be reached via hotfx@ymail.com
This was almost 2 weeks ago, but I have been in Singapore. I'll forward her post if you would like. I'm not interested in the forum.
Let me know so I can give her a follow-up. Thanks Yen.
Hi Yen
It's very, very thoughtful of you to think of the Mrs.
She had another surgery a week ago and they got clean margins (no cancer in healthy tissue). She's healing well - but the itching is driving her nuts. She's still deciding on whether or not to do radiation again. always another hoop to jump through.
Thank you for your kind offer - but please don't go to any bother. My wife is very involved with a couple on-line forums and a local support group that has been great for her.
Have a great weekend - thanks again.
Thanks for taking the time (HD) . ( much appreciated) I'll forward your thoughts. My best to your Wife and Family.
Don't be a stranger!
Get well.
Thanks everyone
Bullish
Agreed. Long insanity.
When will they man the fuck up and downgrade the UK, the US and Japan???
Perhaps after they have to hike rates ?
Now more towels?? Shit, man.. I could of used as a clean-up rag.
Rating agencies serve a very important purpose in the new reality. They confirm what we already know, but is in stark contradiction to the fantasy picture being peddled in the mainstream financial news. Thus they make it hard for markets to live in complete denial (at least for a day or two until the next politician or technocrat speaks).
Long inflationary depression
Maybe it's the time of the month to get moody; hormonal surge or somethin.
Or some good old fashioned kick ass about to be delivered to the fakers.
Don't expect anything hormonal out of Warren, he only gets moody when the brown envelope doesn't arrive in time.
In other news (good ones for once)
http://www.buckeyefirearms.org/node/8381
May sees 20.6% increase in firearms sales checks over same month last year; 24th straight month over month increase
Not sure how increased ownership of weapons of personal destruction is good news... it's not a positive portent.
It means the sheep are trading in their pitchforks for something more robust....To me that is a positive.
Must be something big going down as Cameron and his band of clowns are in a 'secret' meeting that has been going on for a few hours. I rather suspect that Spain's capital requirements are in excess of even the largest estimates. I've got the figure pegged somewhere between 500-700 billion euros.
When I were a lad at school if I got a B-, I'd be jumping for joy!
The quality of Agency ratings these days aren't what they used to be ;)
I think they're in a race to the bottom just like the currencies.
The PIIGS are already "the killer b's" and Geithner thinks that TARP for Europe will work (when LTRO didn't)?
Obama and Geithner are frantic. Besides, the US mess is our own fault, not Europe's.
http://confoundedinterest.wordpress.com/2012/06/08/geithner-pleads-with-...
Could be the bank jog has been underestimated....and under reported
They may have to give them some cash / credit or they go belly up next week...
Which is better ....give them money and keep the ponzi going ...
or let them go down ..dragging anyone they can grasp on to down with them....
The accountants will let us know next week...
Fear is more powerful than greed. Thus, the ongoing bank runs/capital flight is likely quite acute. Thus, any dithering (and you can also count on Eurocrats to dither until after the Greek elections) will make the problem irreversible. Look for capital controls-or failing that-a banking system collapse. In a 20:1 levered system just 5% capital flight means insolvency. Ain't leverage great!
spider-man towels
Spain's banks will get what they need. It won't be fair, it won't be transparent, and it won't be a permanent solution, but pigmen always get their way. You can take that to the bank.
That sounds straitforward, but TARP led to a crash and remember not all banks and bankers are created equal.
@skeptic: you got that right buddy. Banks and sovereigns will get bailed. But notice the growing side-effect: nobody beleives in the laws of supply-demand and comeptition anymore. Bailouts and rescues and easing are the new normal. Nobody thinks that money is created through labor. It's become a political tool where he who owns the printing press decides who's "labor" is worth anything. Confidence in money itself is dropping. we're only different from Zimbabwe by degree
Well said Caviar!
What if it fails? Then what?http://www.baycitizen.org/blogs/pulse-of-the-bay/pension-reform-san-jose...
4.2 billion dollar debt for a "redevelopment Agency" sounds like a lot of money for San Jose. How big of City are we talking here?
http://en.wikipedia.org/wiki/San_Jose,_California
doesn't seem small. doesn't seem poor either. "one of the richest cities in the world" actually.
what's going on with the political stuff?
http://www.mercurynews.com/opinion/ci_20817705/mercury-news-editorial-se...
oops! they appear to be going bankrupt!
what was the name of the great California band again?
http://www.youtube.com/watch?v=8lCMUkqpI7o&feature=related
EEEEEHAWWWWW! SHAKE IT BABY!
The [ obscure: Fitch/ Egan-Jones , ratings agencies are dropping TAPE BOMBS in London these days? Ahh that Jubilee!
This crap has been telegraphed for EVER! First the banks , then the sovereigns. VISA/VerSA in Europe!
I think Greece benefits more from being a "member" of the Euro than Italy does and think Italy would be more likely to go-it-alone, so to speak, and leave the zone more readily and willingly than Greece.
I love how MSM tell the public that the world is divided between "bulls and bears". Two blind and mindless "teams" that are willing to throw their money at a cause, not on the basis of profitability or valuation. It's like being a sports fan, not an investor
Indeed. Of course, no different in politics, religion, race, gender, geography, you name it - it's always an "us" vs "them" mentality. Seems to be hardwired into most people.
If? I'm just saying if!
I would have hedged (aud/jpy) and (aud/usd) with a 40 pip spread, 120 seconds before the market closed.
Turd, I apologize. I did (NOT) think aud/usd would squeeze 400 pips! The trend is still intact, and I still think we could explore (93). I did well on the short lived / China rate cut though.
How does it even matter anymore. It is no longer "if"'but "When". Exponential this exponential that, not since 2008 this...not since 2009 that's. We have not made any progress, it's as if 4 years of our lives have not occurred, yet we cannot correct our wrongs nor solidify our rights.
JackT
You certainly make sense. Ask me Sunday after the Carnival.
I don't think a deal gets done just yet. The idiots will squabble for every Euro. Downside and retest of recent lows next week.
Does anyone care to answer why futures closed super green tonight with all the latest bad news. or is the bad news (I consider this really bad news) simply considered good news ?
(because it means it's so bad that QE3 will be announced at the next FOMC meeting on June 19th)
DOW (mini) Futures:
12554.2 12503.0 97.00S&P 500 (mini) Futures:
1325.66 1322.0 12.00NASDAQ (mini) Futures:
2559.21 2557.0 26.50Does anyone care to answer why futures closed super green tonight with all the latest bad newsblueskies123
Not Really . Perhaps it's time to read a chart? What are the (q) / (y) levels in {nq/vx}? What is alpha?
What is DELTA?
again:http://www.youtube.com/watch?v=8lCMUkqpI7o&feature=related
or if you prefer a "dancing turtles":
http://www.youtube.com/watch?v=ugRct9pNQYM&feature=related
any questions?
Spain's banking problem is largely specific to the country and is not likely to be a major source of contagion to other euro area countries,
How does Spain having lots of real-estate loans have no impact outside Spain when RBS has £18 billion exposure and that is regarded as small compared to France and Germany ?
So they shovel in some money from another country where it is called LIabilities and move it across the table where it becomes Assets as they wait for Deus Ex Machina to turn up
Fuck Moody's.
Why is it that as the inevitable and predictable systemic collapse of the fractional reserve banking system unfolds before our eyes we have to read a whole pile of BS about bailouts and ratings frrom supposedly informed experts?
How abt the DBRS ratings? Spain wont get margin hike unless DBRS lowered spain to step 3 ratings
where by by simply since they ended up being addicted to you will like creatures digital photography training.
Bond Vigilantes rampant in Euro land; a bit after the event as the financialised Rage is already spread world wide.
A nuke could go off and the market wouldn't care
The timing of bad news is everything
Spain's RE bubble has burst with bad marking of bank assets to boot. In addition to that the regional govs are BK too, the perfect financial storm!
Sure...sure...just keep pouring money into the (bottomless pit) banks over there so the "smart money" can keep grabbing it and stuffing it into tax havens.
Europe's Web of Debt (2010) : http://www.nytimes.com/interactive/2010/05/02/weekinreview/02marsh.html
And they fixed what in the last 2 years?
WHAT?
I think i'll open a nice bottle of single malt and get silly drunk....
In thinking about the so-called "Chinese wall" between the corp-geeks and the BSD types (see Liar's Poker for the acronym) in investment banks, it seems to me that:
The bigger peril to worldwide finance is the collusion between the guvmint and the banksters in regions, for example, in Spain. No doubt this is happening big time in China too. And now the whole country of Spain for now and China for later is in a death stall from a mismanaged money flame-out.
Seems like a "Chinese wall" between guvmint and banksters might be better in the public space - regulatory-wise - than in the private regulatory space. After all this investment banker's Chinese wall was erected (gotta love that term with respect to BSD) to prevent illicit profits from front-running. But what is to protect global finance from tumbling into a bottomless pit of "delay and pray" tactics while free-falling in a Mark To Meaningless death spiral after the collusion has magnificently imploded in a Keyne's style "conventional failure" where no one can be blamed.
Be seeing you on the other side of the financial wormhole; em, what is left of you, that is. Cheers, -AB
Spain: Financial Stability Assessment
Press release: http://www.imf.org/external/np/sec/pr/2012/pr12212.htm
Full report ( pdf alert) http://www.imf.org/external/pubs/ft/scr/2012/cr12137.pdf
"Under the adverse scenario, the largest banks would be sufficiently capitalized to withstand further deterioration, while several banks would need to increase capital buffers by about EUR 40 billion in aggregate to comply with the Basel III transition schedule (core tier 1 capital of 7 percent)."
So the real number is times 10 or am i to conservative.
http://www.moviesounds.com/office/problem.wav