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FT Deutschland On The Upcoming Austrian AAA-Rating Downgrade

Tyler Durden's picture




 

Remember Austria: that "other" AAA-rated country, whose megabank Erste recently made headlines for covering up its sovereign CDS exposure? It appears that AAA rating, which means Austria is still eligible to fund the EFSF, may soon be cut, putting even more pressure on Germany and, of course, France, and thus concerns for ratings downgrades there, to bear the brunt of what is an increasingly impossible bail out plan for Europe. It also means that the market will now be fearing not only a kneejerk reaction to the perpetual French downgrade terror threat courtesy of S&P and Moody's, but can now add not only Hungary and Belgium but also Austria to the list of countries due for some inverse rating agency love trim. As for the catalyst: "In two weeks, Moody's analysts to come to Vienna to assess the situation on the ground. Felderer considers it possible that Austria would put on negative outlook in this review." Alas, it appears that the Grinch is about to steal AAAustria's vaunted rating for Christmas, and push the direction of contagion into a whole new direction.

From FT Deutschland, google translated:

In Austria, a spillover of the Italian financial crisis and a loss of top rating is feared. "Austria is not sitting so safe in his Triple-A, as we would like it," said Bernhard Felderer, head of the Vienna Institute for Advanced Studies, on Wednesday. So far, the country of the three major rating agencies Moody's, Standard & Poor's and Fitch credit rating of the top "AAA" rated. They complain, however, the government in Vienna did not save as much as it could.

 

Felderer, one of the most famous economists of the country disagreed with his statements to the government in Vienna. Finance Minister Maria Fekter holds the top rating for secured.

 

Austria's economy is closely intertwined with that of Italy. The banks give to their outstanding debts to the southern neighboring country with 16.5 billion euros. Bank Austria, a daughter of Milan and UniCredit Austria's largest institute, was downgraded by rating agencies already.

 

The Italians do not make it to calm the situation, according Felderer Austria also had a serious problem: "It may happen that Austrian bonds will be bought less frequently, which means in this country expensive interest rates on government debt," he said.

 

In two weeks, Moody's analysts to come to Vienna to assess the situation on the ground. Felderer considers it possible that Austria would put on negative outlook in this review. Of the six euro area countries that have a triple-A, was previously the position of France as the most vulnerable, because the country's banks had failed inversed strong in Greek bonds. If there is a downgrading of France and Austria, is also the good rating of the euro bailout EFSF risk.

 

In order to reassure the financial markets, the government plans to introduce a debt brake in Vienna soon after the German model. "The negotiations go," said a government spokesman. Claus Raidl, Board President of the Austrian National Bank requires an additional tightening of austerity. According to his calculations, the national debt by 2012 will rise by another two percentage points to more than 74 percent of the gross domestic product. If you add the debt of railway companies and other state facilities are included, thus 85 percent next year and 87 percent.

Read more about the "debt brake" plan here.

 

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Thu, 11/10/2011 - 10:55 | 1865841 GeneMarchbanks
GeneMarchbanks's picture

Warm-up for the France downgrade no doubt. Vienna is not so far from Paris if you're traveling from the States, just FYI for you S&P analcysts.

Thu, 11/10/2011 - 11:26 | 1865983 Harlequin001
Harlequin001's picture

And now we discover why Europe and the US in particular was so keen to introduce all this 'Know Your Client' regulation into the offshore investment business.

Personally I'm always tripping over these terrorists trying to launder US200 per month in an offshore savings plan.

Good job we gave up all those rights wasn't it?

Thu, 11/10/2011 - 10:52 | 1865843 Mongo
Mongo's picture

Doing the debt waltz...

Thu, 11/10/2011 - 12:34 | 1866301 Andrew G
Andrew G's picture

Blimey, Gerry-speaking Pigs!?

Thu, 11/10/2011 - 11:25 | 1865847 speconomist
speconomist's picture

nvm.

Thu, 11/10/2011 - 10:54 | 1865854 AngryGerman
AngryGerman's picture

Der Führer wird nicht glücklich sein!

Thu, 11/10/2011 - 11:27 | 1866000 Harlequin001
Harlequin001's picture

Achtung Spitfire!

Now what was that again?

Thu, 11/10/2011 - 10:54 | 1865858 Peter K
Peter K's picture

France/Germany 10yr 161bp.... and rising. You go girl:)

Thu, 11/10/2011 - 11:03 | 1865860 PaperBear
PaperBear's picture

Watch Keiser Report: Gold Wars

http://sgtreport.com/2011/11/keiser-report-gold-wars/

“The ECB can print euros, the Federal Reserve can print dollars and the IMF can print these Special Drawing Rights.”

“The first ever financial war game conducted by the Pentagon… no one knew how to use stocks, bonds and DERIVATIVES to fight a war.”

“The insiders can protect themselves, the people who lose are average citizens, people saving in a bank account, people with retirement savings, annuities, insurance policies, anything that is denominated in nominal dollars that is not going to go up with inflation, they’re the victims. This is sort of organised theft, taking money from average and giving it to the elites who know how the game is played. So that is why they like paper money.”

“People say there’s not enough gold to support world trade. There’s always enough gold, it’s just a question of price” – the price in some fake paper instrument.

“In 1925 if they had said $50/oz instead of $20/oz, that might have been mildly inflationary and we might have avoided the Great Depression.”

EVERYONE NEEDS TO LISTEN AND UNDERSTAND WHAT JAMES RICKARDS IS SAYING BECAUSE HE IS MAKING ABSOLUTE SENSE.

Thu, 11/10/2011 - 10:55 | 1865867 RobotTrader
RobotTrader's picture

One shocking headline after another

Just feeding the bears

Meanwhile, the SPY is still above the 21-day EMA

http://bigcharts.marketwatch.com/kaavio.Webhost/charts/big.chart?nosetti...

Thu, 11/10/2011 - 11:30 | 1866006 Harlequin001
Harlequin001's picture

Phew, that was lucky...

Acrtually Robo I could use some good advice right now; I have this shit load of money currently tied up in gold bullion that I'd really like to strap to a depth charge. What do you recommend?

Thu, 11/10/2011 - 10:57 | 1865876 DaBernank
DaBernank's picture

Schnitzel is the un-official currency anyway, we'll be happy to return to it!

Thu, 11/10/2011 - 10:59 | 1865888 Dr. Nancy
Dr. Nancy's picture

All that's happening is predictable, as there are 7 stages that every
major economy goes through. Those who know how it works profit & massive
wealth is transferred to them. Several months ago I learned this
information from a millionaire whose site I found & am sharing it with
everyone I know.
His free video
"How To Create Incredible Wealth in Today's Economic Crisis"
is at:
http://theelevationgroup.net/presentation/register.php?a_aid=160667&a_bid=290b868b&chan=y
Hope this info helps everyone as much as it has me.
Dr. Nancy

Thu, 11/10/2011 - 11:32 | 1866031 Harlequin001
Harlequin001's picture

yes but does it pay us the same fee as well?

Thu, 11/10/2011 - 11:34 | 1866035 Harlequin001
Harlequin001's picture

That'll be a surprise attack then...

Honestly, this is like something straight out of 'Blackadder Goes Forth"...

Thu, 11/10/2011 - 11:04 | 1865893 Little Red Rooter
Little Red Rooter's picture

Goulash crash, bitchez!

Store your hops and barley dry!

 

 

 

Thu, 11/10/2011 - 11:00 | 1865895 lolmao500
lolmao500's picture

Downgrade of America at the end of November.

Downgrade of Austria at the end of December.

Downgrade of France before the April presidential election.

Win win win!

Thu, 11/10/2011 - 11:02 | 1865908 Quokka
Quokka's picture

What's happening in the Netherlands these days? They never seem to get a mention. Maybe they're too stoned to worry about anything.

Thu, 11/10/2011 - 11:50 | 1866108 Silvarouvres
Silvarouvres's picture

In the Netherlands there has been a remarkably underreported development, even in the country itself to some extent, that centered around the previous central bank president (and member of the Trilateral Commission, former chairman of BIS) Nout Wellink. He was clearly snubbed for another term at the helm by the government which was helped by Wellink's arrogant behaviour that triggered quite some resistance to him with the general public (he denied any wrongdoing or errors of judgment in the Icesave/Landsbanki affair, the ABN-Amro takeover and the demise of DSB bank). The Dutch National Bank proposed another candidate when it was clear that the battle for Wellink was lost, only to be snubbed again by the government who pushed their candidate through, a relatively young and unexperienced guy from the Finance department.

It seems that since then the Netherlands isn't as close to Germany as it has been since WW2 when it comes to monetary policy (dutch guilder was pegged to deutschmark long before all EU-currencies were pegged to one another). Don't get me wrong, NL is still closer to DE than to FR or anything south of Brussels but the media and elites is advocating 'stepping up to the plate' quite vocal: the EU must be saved by the rich countries footing the bill, because the alternative is unthinkable (echoes of the TPTB campaign during the referendum on the EU constitution come to mind). In other words, I doubt whether NL will stand by Germany if the pressure keeps rising like e.g. strongly suggested by Ambrose Evans-Pritchard : "US and China must crush Germany into submission" http://blogs.telegraph.co.uk/finance/ambroseevans-pritchard/100013198/am...

Thu, 11/10/2011 - 11:03 | 1865916 A Man without Q...
A Man without Qualities's picture

There is no requirement that a sovereign is AAA to fund the EFSF, but rather for the fund to be AAA a certain proportion of backers are triple A.  If one is downgraded, the result is either the other AAAs increase their share, or the fund has a lower rating.  

This is a key reason for a reluctance of investors to step forward, it's a first to default risk across the Eurozone...

 

Thu, 11/10/2011 - 11:17 | 1865946 Mercury
Mercury's picture

It appears that AAA rating, which means Austria is still eligible to fund the EFSF,...

Makes you wonder if it isn't worth it for a country like Austria to engineer a downgrade to 'AA' for itself just to avoid the EFSF bullshit.

Thu, 11/10/2011 - 11:36 | 1866046 Harlequin001
Harlequin001's picture

All debts are joint and several old stick, they're still on the hook whichever way you look at it...

Thu, 11/10/2011 - 11:17 | 1865955 Aunty Christ
Aunty Christ's picture

Austria's contribution is a rounding error. Belgium will be next to get downgraded, then on to France

Thu, 11/10/2011 - 11:50 | 1866094 Silvarouvres
Silvarouvres's picture

wrong place

Do NOT follow this link or you will be banned from the site!