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Ireland's Debt Downgraded to Junk Status
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The rolleyes was used to show sarcasm
I still cant get over how all of the mistakes made by our regulator and past government were dismissed so readily as "groupthink", maybe the same could be applied to the rating agencies in the run up to the subprime crisis
Wait until the EU comes up with its own rating agency which is the poked into giving AAA left right and center, that's when things will get real fun
We already have euro stress tests which have proclaimed bankrupt banks as "fine and dandy" its a small step from there, Barroso was hinting at one already.listermint wrote: »You can't really be serious, really ? i mean really......... ... :eek:
Yes really, if you read Moodys assessment posted earlier you would see its quite realistic and balanced, some euro politicians on the other hand do not want to admit there is even a problem to begin with. In their fantasy world where failure/default/bankruptcies dont exist, there is no crisis because a crisis can not exist in their perfect system...0 -
The rolleyes was used to show sarcasm
I still cant get over how all of the mistakes made by our regulator and past government were dismissed so readily as "groupthink", maybe the same could be applied to the rating agencies in the run up to the subprime crisis
Wait until the EU comes up with its own rating agency which is the poked into giving AAA left right and center, that's when things will get real fun
We already have euro stress tests which have proclaimed bankrupt banks as "fine and dandy" its a small step from there, Barroso was hinting at one already.
I wouldnt trust a rating from a vested interest group such as these agencies as much as id trust a rating from a nationalised politician.
Make your own researched assumptions.
The likes of Moodys et al are nothing more than a blunt instrument to puppet the markets.0 -
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Full article if anyone wants to read it:A leading credit-ratings agency demoted Ireland's bonds to junk status Tuesday, signaling that plans to get private-sector investors to share in the burden of Greece's debt problems could have ramifications for other indebted euro-zone economies.
Moody's Investors Service announced toward the end of U.S. trading that it was cutting Ireland's debt rating by one notch to Ba1, from Baa3, its lowest investment-grade level. It is the first of the major ratings services to downgrade the country's debt to junk levels.
Table: European Sovereign Credit Ratings
In European trading ahead of the announcement Tuesday, euro and financial markets had appeared to show signs of relief after Italian lawmakers fast-tracked efforts to pass a €40 billion ($56 billion) austerity plan in an effort to prevent Europe's debt crisis from infecting the Continent's third-largest economy.
Euro-zone governments also accelerated their discussions Tuesday on efforts to resolve Greece's debt problems, including exploring ways to cut its €350 billion debt burden.
Euro-zone leaders are likely to hold a special summit Friday to discuss ways to help Greece, a European Union diplomat said. Under discussion is a proposal from the Institute of International Finance, a Washington-based organization grouping more than 400 financial institutions world-wide.
The IIF proposal—which includes ideas for buying back Greece's debt at a discount and exchanges of bonds to reduce Greece's debt-servicing burden—is now the road map for advancing talks, an official participating in the euro-zone meetings said.
Debt buybacks and bond exchanges would aim to retire market bonds at around their current trading value, sometimes more than 60% off face value, and use the discount to help reduce Greece's debt burden.
Charles Dallara, managing director of the IIF, welcomed a statement from euro-zone finance ministers following a Monday night meeting, saying it was "an important signal" suggesting governments were converging on "more fundamental approaches" for handling Greece's debt.
Mr. Dallara, who met Tuesday morning in Brussels with officials including Olli Rehn, the European Union economic and monetary affairs commissioner, said by telephone afterward that ministers appeared to be moving toward a "lasting solution" for Greece. He said if these moves should lead to a temporary "selective default" assessment by rating agencies, it wouldn't be dire. "There is a world of difference between a temporary selective default that is part of an orderly process, and a disorderly default. Markets wouldn't be disrupted by a selective default if it were in the framework of a lasting solution for Greece," he said.
But Moody's announcement later Tuesday demonstrated worries that such reasoning could be applied beyond Greece.
Reuters
Greece's Finance Minister Evangelos Venizelos, right, talks with his Italian counterpart Giulio Tremonti at a meeting in Brussels on Monday.
[url="http://online.wsj.com/video/news-hub-stocks-tumble-on-europe-debt-worries/A5ABAF26-C650-4E60-878F-B6CAB1BA965B.html]VIDEO[/url]
The Dow tumbled 151 points Monday, as another round of anxiety over Europe's debt crisis spurred investors to flee risky assets like stocks. Steve Russolillo has details.
Moody's said a key reason for its downgrade of Ireland's bond rating was the growing possibility that Ireland wouldn't return to financial markets at the end of its current bailout at the end of 2013—but also because calls for the private sector to share the Greek burden suggest the same thing will be asked in Ireland. Moody's downgraded Portugal last week, citing similar reasons.
Moody's announcement near the end of a choppy U.S. trading session reversed a modest stock gain and sent investors scurrying into safer assets. The euro fell and the Dow Jones Industrial Average shed about 70 points in the final half-hour of trading to finish down 58.88 points, or 0.47%, at 12446.88.
Reactions were more muted among bond-market participants. With Irish two-year bonds already yielding well above 16%, a substantial amount of risk had already been priced in. "Do you really think that if you have two-years yielding 16% that you're investment grade?" said Andrew Brenner, head of emerging markets at Guggenheim Securities.
Even so, safe-haven Treasurys ticked higher after the Moody's move, pushing the yield down to 2.908%, its lowest level in three weeks. Yields fall when prices rise. Earlier in the session, gold prices climbed for a sixth straight session to finish at an all-time high of $1561.90 per troy ounce.
Reuters
Berlusconi, in glasses, called for 'short-term sacrifices' from Italians.
In Italy, Prime Minister Silvio Berlusconi called for Italians to make "short-term sacrifices for longer-term gains" in rallying behind the austerity measures, including a public-sector wage freeze, that his conservative governing coalition unveiled two weeks ago. The coalition hoped that announcing the plan would be enough to fend off market concerns over Italy's solvency.
But on Friday and Monday, investors fled the country's bonds in part because of fears that Mr. Berlusconi might not have the political support needed to quickly get the plan through both houses of Parliament.
Senate leader Renato Schifani, a member of Mr. Berlusconi's People of Freedom Party, told reporters during a news conference that he expected the measures to pass the Parliament's upper house by Thursday, paving the way for a possible vote in the Chamber of Deputies, lower house, by Sunday.
In an assessment of Italy's economy released late Tuesday, International Monetary Fund called for a "decisive implementation" of the nation's latest fiscal package. The IMF also said "a number of" its executive board members "felt that more frontloaded spending measures would have a positive effect on market sentiments."
More
Irish Government Derides Moody's
Heard: The Euro's Sinking Fortunes
In the Senate, Mr. Berlusconi's conservative coalition comfortably has enough votes to pass legislation. In the Chamber, however, the premier has only a thin majority, meaning that all of his coalition members need to close ranks for a sure passage of the austerity bill.
"The crisis is pushing us to accelerate this process according to an extremely fast timetable," Mr. Berlusconi said in a statement Tuesday. "We need to eliminate any doubts over the efficiency and credibility of the measures, but we also need to remove obstacles that are holding back the growth of our economy."
Mr. Berlusconi's comments came as the Italian government's borrowing costs jumped to 3.7% for one-year Treasury bills at Tuesday's auction, from 2.2% only a month ago.
The government's austerity measures are aimed at balancing Italy's budget by 2014. Most of the cost savings are expected to kick in after 2012, however, in what the government says is an effort not to stall economic recovery in a country that already has one of the euro zone's lowest growth rates.
Italy has been thrust suddenly into the European debt crisis in part because of bubbling tensions over the past few months within the governing coalition.
A recent public spat between Mr. Berlusconi and Economy Minister Giulio Tremonti has raised questions among some investors about whether Mr. Berlusconi is committed to seeing the austerity measures through.
Some analysts had also voiced concerned about Mr. Berlusconi's commitment to passing the austerity package because of a recent government attempt to insert—into the deficit-cutting bill—a measure that would have helped his family's holding company, Fininvest, avoid paying damages as part of a long-running legal dispute with a competitor. The government had inserted the measure into the austerity bill two weeks ago but quickly withdrew it after a large public outcry.
Last weekend, a court ruled that Fininvest needed to pay €560 million to rival CIR as part of the dispute. In a research note Tuesday, Credit Suisse said one of the reasons investors have targeted Italy over the past few days was in part due to the efforts to help Fininvest avoid paying the fine.
"The issue of Fininvest trying to limit paying its fine limits credibility of the government," Credit Suisse said in the note. Later in the day, Fininvest's top lawyer made assurances that Fininvest would pay the fine in accordance with the court order. The lawyer said the company would, however, appeal the court ruling to Italy's highest court.
Meeting Tuesday, EU finance ministers committed to backstop banks that fail stress tests, the results of which will be announced Friday. Officials said all vulnerable banks must recapitalize themselves, be recapitalized by their governments or restructure.
—Jonathan Cheng, Matt Phillips, Giada Zampano and Costas Paris contributed to this article.0 -
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