It’s worthless. If you have to shut down the ratings agencies, then the rating is junk.
Holy fucking shit, the EU is filled with the dumbest bunch of piss heads on the face of Mother Earth!!
Do they really believe they can fix their problem by RELABELING debt?
ASSHOLES IN EUROPE, LISTEN UP. YOU DO NOT HAVE A BRANDING PROBLEM, YOU FUCKING IMBECILES. YOUR PROBLEM’S YOU’RE IN IT KNEE DEEP AND TOO STUPID TO GET YOURSELVES OUT.
Far from helping them, this move is exactly in line with all the other boneheaded missteps they’ve made up until now.
If people didn’t trust the debt when artificially high ratings were attached to it, what do you think forbidding ratings agencies from issuing ratings on that debt – just as those ratings are very visibly falling – is going to accomplish?
I’d guess, it will reinforce the belief that EU members are dishonorable scumbags who cannot be trusted with anything.
This kind of horseplay, like trying to create “super riskless bailout funds” and fucking with counterparty liability insurance, is EXACTLY the behavior that will send this system grinding to a halt. You want to see things get real ugly; fuck with bondholders.
Remember, up until now the ENTIRE EU rescue apparatus has been calibrated assuming some resiliency for EU sovereign debt would be present. I’m not talking about demand for new debt being issued; I’m talking about people being willing to hold onto the debt they have.
You want to know what happens if Europe keeps playing these gay little games, screwing with their creditors? Do the words “asset position Exodus” mean anything to you?
The misanthropes of Europe had better start toeing the fucking line, because they’re on thin ice with this shit.
I’m not kidding around here. If outstanding bonds in Europe decide the countries are hopeless, run by men and women with all the capabilities of 7 year olds, you could see the country of Spain disappear literally overnight.
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Nice rant and spot on.
yea we dont like ur ratings, so we’ll make r own.
How dare you fucking talk like that in this blog of nobility.
so if that happens what do we call spainish rice? euro rice, commie rice, rice o roma?
There won’t be any Spanish rice to worry about nomenclature over.
In a perverse way, maybe they can.
If you’re the manager of a pension fund, you’ve probably got something in your fund’s mandate that says “investment-grade debt only”, or some such, where “investment-grade” is defined as “rated higher than XYZ by at least two of the ratings agencies everybody on the street pretends to trust.”
We saw in 2008 that the ratings agencies were full of crap, and anyone who didn’t get the message learned it again in 2011 during the political bullshit associated with the downgrade of the US’s credit rating.
We weren’t the only ones who saw it; fund managers saw it too, and wondered why the hell they were paying fortunes to S&P, Moody’s, and so on. (The answer typically comes in the form of “because the prospectus says we have to.”)
Based on the track records of the ratings agencies, in what material way would having an EU ratings agency issuing BS ratings on debt be fundamentally any different than our present situation?
So what if a hypothetical Central Rating Agency of Europe, tasked with the responsibility of issuing ratings on its own “sovereign” debt, is going to lie through its teeth? At least it’s likely to lie predictably.
I’m honestly not looking forward to seeing this play out, as your position (in contrast to the EU’s) actually makes some kind of sense. But if we’re through the looking-glass and in a land where markets have to remain irrational in order for anything to remain solvent, maybe all we have to do is, like Wile E. Coyote, not look down?
(Or we, as investors, could demand that fund managers actually do some due diligence. A “BUY” recommendation from a sell-side analyst should never be regarded as a substitute for due diligence, and neither should stamps of approval from ratings agencies.)
(Thus endeth my rant. Thanks for the opportunity to vent.)
This isn’t just about the ability of fund managers to buy/hold EU shit.
It’s also about the 500 million people who are going to start demanding aversion to EU sovereign exposure, or else start pulling out their money.
If the EU wanted to help out funds that say they only hold high rated assets, they could have passed a law freeing them from consequences for ignoring those requirments.
And in doing it, they look like con artists…no, worse, they look like dumb con artists.
all the more the shinny stuff. pension funds better start doing the same. at zh,they just ran an article that russia and korea increasing gold holdings. the ruskies may back the ruble so they dont get slammed by devaluation.let them keep talking down the price,thats what we want.
Good point – I was thinking more in terms of US (private/state/local) fund managers, who couldn’t be affected by such a law.
Now that I’m thinking from the point of view of a sovereign wealth fund, and/or an EU manager – the picture gets murkier. It’s one thing for a sovereign to default on debt ‘owed’ to its own citizens, and quite another to default to debt owed to other nations.
Maybe the fools lending to this clownshow need a lesson in sovereign risk?
Fuck the ratings agencies – they are flawed arbiters of credit worthiness anyway.
Let the dickhead bond holders all rush to the exits at the same time.
They and their government borrowers are now all in it together…