Moody’s Downgrades Credit Rating Of 9 Danish Banks

Moody’s downgrades nine Danish banks (AFP, May 31, 2012):

MOODY’S has downgraded the credit rating of nine Danish banks, citing the impact of the rolling eurozone crisis on bank loan quality and on their fund-raising ability.

The nine, along with the Finnish subsidiary of one of the banks, saw their ratings cut one to three notches, with one of them, DLR Kredit, pushed three steps down into the junk-bond realm at Ba1.

“Danish financial institutions face sluggish domestic economic growth, weakening real estate prices and higher levels of unemployment, as well as the risk of external shocks from the ongoing euro area debt crisis,” Moody’s said.

“Asset quality is deteriorating, and these pressures are expected to continue.”

Read moreMoody’s Downgrades Credit Rating Of 9 Danish Banks

Postcards From Sweden

Postcards From Sweden (ZeroHedge, May 26, 2012):

There are those who claim that rating agencies are utterly irrelevant, incompetent, behind the curve and merely echo chambers of popular opinion. They are 100% right. There is, however, one critical function that rating agencies execute – they put into words what everyone else knows is fact, but are simply unwilling to recognize due to the systemic implications of admitting yet another lie: subprime, failed banks, Europe, etc. By the time a rating agency has finally opined on something in a way indicative of the truth, it is too late to stick one’s head in the sand. Yesterday precisely this happened once more – from the WSJ: “Credit rating agency Moody’s Investor Service Friday downgraded a range of major banks in Sweden and Norway, citing contagion risks from the European debt crisis. But observers said the cuts were less sweeping than feared and reflect the strength of Nordic banks versus their European peers, which risk sharper downgrades as Moody’s continues a Europe-wide review that started earlier this month with cuts to 26 Italian lenders. In February Moody’s placed various ratings of 114 financial institutions in 16 European countries on review for possible downgrades, highlighting the banks’ vulnerability to the euro zone sovereign debt crisis. “We read this as a sign of the strength in relative terms of Swedish banks which are coping well,” Swedish Central Bank Deputy Governor Per Jansson said. Moody’s Friday downgraded the ratings for Sweden’s Nordea Bank AB (NDA.SK) and Handelsbanken AB (SHB-B.SK) by one notch to Aa3, and for specialist agricultural lender Landshypotek AB by two notches to Baa2.” Furthermore, as Zero Hedge reminded two days ago, when it comes to deposit backing, European banks are so levered from a loan-to-deposit ratio, that even the tiniest risk of deposit flight would result in immediate undecapitalization, and further outflows. Oddly, nowehere is this more evident than in various Scandivanian banks such as Danska, Handelsbanken (SHB), Swedbank, and Nordea, two of which were just downgraded by Moody’s.

Visually this can be seen here.

Of course, to readers of Zero Hedge this is not news. Back in March this particular fringe blog explicitly warned, while everyone else kept silent that…

With banks such as Danske, SHB, Swebank, DnB, and Nordea literally at 200% Loan-to-Deposits, but most other European banks too, even the tiniest outflow in deposit cash (ala what is happening in the PIIGS) will send the system into yet another liquidity spasm. Only this time, since what little unencumbered assets remaining have already been pledged to the ECB, there will be no quick LTRO collateral-type fix this time.

Sadly, many preferred to continue sticking their heads in the sand. Until Moody’s announcement made continuation of that avoidance behavior impossible. Which is why we present the following postcard we just got from Sweden. We can only hope this is a very isolated incident of people enjoying to wait in line for a few pieces of paper, completely devoid of any contextual reference. That, or they are all suddenly applying for a mortgage, or in the best case, merely enjoying the wonderful weather, just incidentally next to a branch of one of Sweden’s largest banks.

Finally, for those who think we are picking on Sweden, here again, is the simple math presented visually two short days ago.

Read morePostcards From Sweden

Fitch Downgrades Greece’s Credut Rating As Leaders Spar Over Euro Membership

And Japan?

Japan’s WTF Chart … Or Why Japan Is ‘DOOMED’!


Fitch Cuts Greece as Leaders Spar Over Euro Membership (Bloomberg, May 17, 2012):

Greece’s credit rating was downgraded one level by Fitch Ratings on concerns the country won’t be able to muster the political support needed to sustain its membership in the euro area as leaders began campaigning ahead of the second national vote in six weeks.

Read moreFitch Downgrades Greece’s Credut Rating As Leaders Spar Over Euro Membership

Moody’s Downgrades 16 Spanish Banks

Moody’s Downgrades 16 Spanish Banks, As Expected (ZeroHedge, May 16, 2012):

As was leaked earlier today, so it would be:

  • MOODY’S CUTS 16 SPANISH BANKS AND SANTANDER UK PLC
  • MOODY’S CUTS 1 TO 3 LEVELS L-T RATINGS OF 16 SPANISH BANKS
  • MOODY’S DOWNGRADES SPANISH BANKS; RATINGS CARRY NEGATIVE

In summary, the highest Moodys rating for any Spanish bank as of this point is A3. But luckily the other “rumor” of a bank run at Bankia was completely untrue, at least according to Spanish economic ministry officials, so there is no need to worry: it is all under control. The Banko de Espana said so.

Complete summary downgrade grid:

Another way to visualize the bloodbath as Spain no longer has any bank rated A2 or higher:

Full report below:

Read moreMoody’s Downgrades 16 Spanish Banks

Moody’s Downgrades 26 Italian Banks, Outlook Negative

Moody’s downgrades Italian banks, outlook negative (Reuters, May 15, 2012):

Moody’s Investors Service downgraded the long-term debt and deposit ratings for 26 Italian banks on Monday, citing the country’s recession and rising bad debt levels.

The banks were all downgraded by at least one notch, and for some, by as many as four notches, Moody’s said, adding all of the banks affected have a negative outlook.

The moves marked another blow for Italy’s top five banks after they were asked to find some 15 billion euros by June to meet tougher capital requirements set by the European Banking Authority due to vast holdings of domestic government bonds.

Economic recession in Italy has worsened credit quality as banks come under pressure from the government to put cheap funding from the European Central Bank to work in the real economy.

“The ratings for Italian banks are now amongst the lowest within advanced European countries, reflecting these banks’ susceptibility to the adverse operating environments in Italy and Europe,” Moody’s said in a statement.

Read moreMoody’s Downgrades 26 Italian Banks, Outlook Negative

Fitch Downgrades JPMorgan Chase To A+, Watch Negative … After A $2 Billion Trading Loss


CEO Jamie Dimon revealed Thursday that JPMorgan had suffered a $2 billion trading loss.

Fitch downgrades JPMorgan Chase (CNN Money, May 11, 2012):

NEW YORK (CNNMoney) — The closing bell brought no relief for JPMorgan Chase on Friday, as a major credit rating agency moved to downgrade its debt almost exactly 24 hours after the bank revealed a $2 billion trading loss.

Fitch Ratings downgraded both JPMorgan’s short-term and long-term debt, with the latter falling to A+ from AA-. The bank, the country’s largest by assets, was also placed on ratings watch negative.

Fitch said it views the $2 billion loss as “manageable” but added that “the magnitude of the loss and ongoing nature of these positions implies a lack of liquidity.”

Fitch Downgrades JPM To A+, Watch Negative (ZeroHedge, May 11, 2012):

Update: now S&P is also one month behind Egan Jones: JPMorgan Chase & Co. Outlook to Negative From Stable by S&P. Only NRSRO in pristinely good standing is Moodys, and then the $2.1 billion margin call will be complete.

So it begins, even as it explains why the Dimon announcement was on Thursday – why to give the rating agencies the benefit of the Friday 5 o’clock bomb of course:

  • JPMorgan Cut by Fitch to A+/F1; L-T IDR on Watch Negative

What was the one notch collateral call again? And when is the Morgan Stanley 3 notch cut coming? Ah yes:

So… another $2.1 billion just got Corzined? Little by little, these are adding up.

Oh and guess who it was that downgraded JPM exactly a month ago. Who else but SEC public enemy number one: Egan-Jones:

Synopsis: Reliance on prop trading and inv bkg income remain. LLR declines (down $1.7B QoQ and $3.87B YoY) offset DVA losses in the investment bank. Wholesale loans were up 23% YoY and 2% QoQ. Middle Mkt, Cmml Term, Corp Client and Cmml Real Estate lending increased by 9%, 2%, 16% and 19% YoY. Middle Mkt and Corp lending was up 2% and 3% QoQ respectively, while Cmml Term, and Cmml Real Estate lending were down 2%, and 9% respectively. Card and consumer loans were down 2% and 5% YoY respectively (down 5% and 1% QoQ respectively). Non accruals are up 14% QoQ due to weakness in JPM’s student loan portfolio. Reserve coverage is good and capital is adequate. We believe JPM will experience further weakness in its retail portfolio due to a softening economy. We are downgrading.

Full Fitch “analysis”:

Read moreFitch Downgrades JPMorgan Chase To A+, Watch Negative … After A $2 Billion Trading Loss

Egan Jones Downgrades JPMorgan

Egan Jones Downgrades JPMorgan (ZeroHedge, April 13, 2012):

The iconoclastic rating agency, and fully recognized NRSRO to the dismay of some tabloids, which just refuses to play by the status quo rules, and which downgraded the US for the second time last Friday, to be followed soon by other rating agencies as soon as US debt crosses the $16.4 trillion threshold in a few short months, has just done the even more unthinkable and downgraded Fed boss JPMorgan from AA- to A+.

Synopsis: Reliance on prop trading and inv bkg income remain. LLR declines (down $1.7B QoQ and $3.87B YoY) offset DVA losses in the investment bank. Wholesale loans were up 23% YoY and 2% QoQ. Middle Mkt, Cmml Term, Corp Client and Cmml Real Estate lending increased by 9%, 2%, 16% and 19% YoY. Middle Mkt and Corp lending was up 2% and 3% QoQ respectively, while Cmml Term, and Cmml Real Estate lending were down 2%, and 9% respectively. Card and consumer loans were down 2% and 5% YoY respectively (down 5% and 1% QoQ respectively). Non accruals are up 14% QoQ due to weakness in JPM’s student loan portfolio. Reserve coverage is good and capital is adequate. We believe JPM will experience further weakness in its retail portfolio due to a softening economy. We are downgrading.

Full report here.

Moody’s: GREECE HAS DEFAULTED: Creditors To Lose Over 70% On The Value Of Their Investment – Here Is Where We Stand

Moody’s: Greek sovereign credit rating remains at C (Reuters, Mar 9, 2012):

March 9 – Moody’s Investors Service says that it considers Greece to have defaulted per Moody’s default definitions further to the conclusion of an exchange of EUR177 billion of Greece’s debt that is governed by Greek law for bonds issued by the Greek government, GDP-linked securities, European Financial Stability Facility (EFSF) notes. Foreign-law bonds are eligible for the same offer, and Moody’s expects a similar debt exchange to proceed with these bondholders, as well as the holders of state-owned enterprise debt that has been guaranteed by the state, in the coming weeks. The respective securities will enter our default statistics at the tender expiration date, which is was Thursday 8 March for the Greek law bonds and is currently expected to be 23 March for foreign law bonds. Greece’s government bond rating remains unchanged at C, the lowest rating on Moody’s rating scale.

Moody’s understands that 85.8% of debtholders holding Greek-law bonds issued by the sovereign have agreed to the exchange, with the vast majority of remaining bondholders likely to be drawn in following the exercise of Collective Action Clauses that will be inserted pursuant to a recent Act by the Greek parliament. The terms of the exchange entail a discount – a loss to creditors – of at least 70% on the net present value of existing debt. According to Moody’s definitions, this exchange represents a `distressed exchange’, and therefore a debt default. This is because (i) the exchange amounts to a diminished financial obligation relative to the original obligation, and (ii) the exchange has the effect of allowing Greece to avoid payment default in the future.

Greece averts immediate default, markets sceptical (Reuters, Mar 9, 2012):

Greece averted the immediate threat of an uncontrolled default on Friday, winning strong acceptance from its private creditors for a bond swap deal which will eat into its mountainous public debt and clear the way for a new bailout.

With euro zone ministers set to approve the 130 billion euro (109 billion pounds) rescue, French President Nicolas Sarkozy declared the Greek problem had been settled – just as Germany said that any impression the crisis was over “would be a big mistake.”

Markets sharply marked down the value of new Greek bonds to be issued to the creditors, reflecting the risk of paralysis after elections expected this spring and doubts about whether Athens can bring its debt to a more manageable level by 2020.

Sarkozy, who is trailing his socialist challenger for the presidency before France’s own elections in April and May, pronounced the Greek deal a major success.

“Today the problem is solved,” he said in the southern French city of Nice. “A page in the financial crisis is turning.”

Euro zone finance ministers held a teleconference call and were expected to declare Athens had met the tough terms of the bailout, its second since 2010, and to authorise the release of funds which the country needs to meet heavy debt repayments later this month and avoid bankruptcy.

On the streets of Athens, some Greeks denounced the deal as a sham that would impose more crippling austerity on a people already enduring pay and pension cuts and soaring unemployment.

German Finance Minister Wolfgang Schaeuble was also in a more sombre mood than Sarkozy, issuing a warning to Athens which has a record of failing to meet its promises of reform and austerity made to international lenders.

“Greece has today got a clear opportunity to recover. But the precondition is that Greece uses this opportunity,” he told a news conference. “It would be a big mistake to give the impression that the crisis has been resolved. They have an opportunity to solve it and they must use it.”

Under the biggest sovereign debt restructuring in history, Greece’s private creditors will swap their old bonds for new ones with a much lower face value, lower interest rates and longer maturities, meaning they will lose about 74 percent on the value of their investments.

“A VERY GOOD DAY”

Data published on Friday underlined the depth of Greece’s problems. It showed the economy shrank 7.5 percent in 2011, marking the fourth successive year of recession.

That was worse even than 1974, when Greece’s military dictatorship collapsed following a confrontation with Turkey over Cyprus and as a leap in oil prices hit economies around the world. That year the Greek economy shrank 6.4 percent.

Nevertheless, Greek Finance Minister Evangelos Venizelos hailed the bond swap, which the European Union and IMF had demanded in return for the new bailout, as marking a long-awaited success for all Greeks enduring a painful recession.

“I hope everyone will realise, sooner or later, that this is the only way to keep the country on its feet and give it the second historic chance that it needs,” Venizelos, who led often ill-tempered negotiations with the EU and IMF, told parliament.

He said the bond deal had cut its debt by 105 billion euros.

Greece Has Defaulted: Here Is Where We Stand (ZeroHedge, Mar 9, 2012):

After reading this, everyone should have a fairly good grasp of what happened not only today, but ever since the great (and quite endless) European financial crisis took center stage, and what to look forward to next…

From Chindit13

In a nutshell—okay, a coconut shell—this seems to be where we are:

1)  Greece was able to write off 100 billion euros worth of debt in exchange for a 130 billion rescue package of new debt, of which Greece itself will receive 19%, or about 25 billion, so that it can continue to operate as an ongoing concern.  Somehow Greece is in a better position than before, with more debt and less sovereignty and still—by virtue of sharing a common currency—trying to compete toe-to-toe with the likes of Germany and the Netherlands, kind of like being the Yemeni National Basketball team in an Olympic bracket that includes the US, Spain and Germany.  At least a “within the euro” default prevented bank runs in Portugal, Spain, Italy et al.

2)  As a result of the bond haircuts, Greece has many pension plans that can no longer even pretend to be viable, at least according to the original contracted scheme, but pensionholders still working can take heart in the fact that their current wages will be cut, too.

Read moreMoody’s: GREECE HAS DEFAULTED: Creditors To Lose Over 70% On The Value Of Their Investment – Here Is Where We Stand

Moody’s Downgrades Generali, Cuts Megainsurer Allianz Outlook To Negative … A&G’s AIG Moment Is Approaching

A&G’s AIG Moment Approaching: Moody’s Downgrades Generali, Cuts Megainsurer Allianz Outlook To Negative (ZeroHedge, Feb. 15, 2012):

Don’t worry though, those who don’t understand jack shit will tell you it is all contained. But please ask them why – and ask them why Lehman wasn’t when everyone said it too was.

Mass Downgrade: Moody’s Cuts Credit Ratings Of Italy, Spain, Portugal, Slovakia, Slovenia And Malta, WARNS UK, France And Austria On AAA-Rating

Moody’s warns may cut AAA-rating for UK and France (Reuters, Feb. 14, 2012):

Rating agency Moody’s warned it may cut the triple-A ratings of France, Britain and Austria and it downgraded six other European nations including Italy, Spain and Portugal, citing growing risks from Europe’s debt crisis.

Moody’s cuts ratings on Italy, Portugal and Spain (Washington Post, Feb. 14, 2012):

NEW YORK — Ratings agency Moody’s Investor Service on Monday downgraded its credit ratings on Italy, Portugal and Spain, while France, Britain and Austria kept their top ratings but had their outlooks dropped to “negative” from “stable.”

Moody’s also cut its ratings on the smaller nations of Slovakia, Slovenia and Malta. All nine countries are members of the European Union.

London, 13 February 2012 — As anticipated in November 2011, Moody’s Investors Service has today adjusted the sovereign debt ratings of selected EU countries in order to reflect their susceptibility to the growing financial and macroeconomic risks emanating from the euro area crisis and how these risks exacerbate the affected countries’ own specific challenges.

Rating Action: Moody’s adjusts ratings of 9 European sovereigns to capture downside risks (Moody’s, Feb. 13, 2012):

Moody’s actions can be summarised as follows:

– Austria: outlook on Aaa rating changed to negative

– France: outlook on Aaa rating changed to negative

– Italy: downgraded to A3 from A2, negative outlook

– Malta: downgraded to A3 from A2, negative outlook

– Portugal: downgraded to Ba3 from Ba2, negative outlook

– Slovakia: downgraded to A2 from A1, negative outlook

– Slovenia: downgraded to A2 from A1, negative outlook

– Spain: downgraded to A3 from A1, negative outlook

– United Kingdom: outlook on Aaa rating changed to negative

S&P Downgrades 34 Of 37 Italian Banks!

S&P Downgrades 34 Of 37 Italian Banks – Full Statement (ZeroHedge, Feb. 10, 2012):

S&P just downgraded 34 of the 37 Italian banks it covers. Below is the full statement. And so get get one second closer to midnight for Europe’s AIG equivalent: A&G. As for S&P, this is the funniest bit: “We classify the Italian government as “supportive” toward its banking sector. We recognize the government’s record of providing support to the banking system in times of stress.” Even rating agencies now have to rely on sovereign risk transfer as the only upside case to their reports. Oh, and who just went balls to the wall Italian stocks? Why the oldest (no pun intended) contrarian indicator in the book – none other than permawrong Notorious (Barton) B.I.G.G.S.

Mainly Negative Rating Actions Taken On 37 Italian Financial Institutions On Sovereign Downgrade And BICRA Change

LONDON (Standard & Poor’s) Feb. 10, 2012–Standard & Poor’s Ratings Services today said it has lowered its ratings on 34 Italy-based financial institutions. The downgrades follow the lowering of the unsolicited long- and short-term sovereign credit ratings on the Republic of Italy (BBB+/Negative/A-2; see “Italy’s Unsolicited Ratings Lowered To ‘BBB+/A-2’; Outlook Negative,” published Jan. 13, 2012, on RatingsDirect on the Global Credit Portal). They also reflect the revision of our Banking Industry Country Risk Assessment (BICRA) on Italy to group ‘4’ from group ‘3’, and of our economic risk and industry risk scores–both components of the BICRA–on Italy to ‘4’ from ‘3’ (see “BICRA On Italy Revised To Group ‘4’ From Group ‘3’ On Weakening Economic And Banking Industry Conditions,” published Feb. 10, 2012).

Read moreS&P Downgrades 34 Of 37 Italian Banks!

Max Keiser On Corrupt Credit Rating Agencies, The Euro, The US Dollar, Quantitative Easing, Hyperinflation And Gold (Video)


YouTube Added: 17.01.2012

Description:

Press TV interviews Max Keiser, journalist and broadcaster in Paris about the credit rating agency’s role in having nations impose austerity measures on the people of Europe and the damage this is causing to sovereign nations.

Egan-Jones Downgrades Germany’s Credit Rating From AA To AA-

Egan Jones Downgrades Germany From AA To AA- (ZeroHedge, Jan. 18, 2012):

Sean Egan strikes again, this time downgrading Germany from AA to AA-.

Germany maintains its position as the European Union’s top economy. However, Germany has been shouldering the burdens of other EU countries via its exposure to the EFSF and indirectly via the ECB’s hefty exposure to the weaker banks and the weaker sovereign credits. The country’s debt to GDP of 83% as of 2010 (expect near 86% for 2011) and a deficit to GDP of 4.6% is weak (and getting weaker) for a top-tier country. On the positive side, unemployment was only 6.8% but will probably increase as many EU countries implement austerity measures. Other positives were the positive (EUR133B) balance of trade and the positive (EUR193B) current account as of the end of 2010. Inflation has been fairly moderate at 2%, but we expect an increase as a result of the decline in the euro relative to the dollar.

German chancellor Angela Merkel continues to create tension with EU member states by pushing for ratification of changes to the Lisbon Treaty. The government insists that private investors bear more of the costs of further European bailouts. Note, the cost of the bailouts is likely to be absorbed via increased support for the EFSF, the ESM, the ECB and a rise in the number of euros. The fallout from a likely Greek default needs to be monitored.

via Egan-Jones

Time To Cut Germany’s Credit Rating? Egan-Jones Downgrades To AA- (Forbes, Jan. 18, 2012):

Prone to controversial actions, ratings agency Egan-Jones axed Germany’s sovereign rating from AA to AA- and kept it on negative credit watch. While remaining the Eurozone’s strongest economy, German tax payers will be footing a significant portion of the bill for the different bailout mechanisms in place, from the EFSF to the ECB and even the IMF’s funding facilities.

Speaking with Forbes, Egan-Jones co-founder Sean Egan said “[Germany’s] credit quality has slipped and its debt-to-GDP ratio is increasing.” In the report, the analysts noted the Eurozone’s top dog has debt exceeding €2 trillion ($2.6 trillion) and cash of about €235 billion ($301 billion). Debt-to-GDP levels hit 83% in 2010, will probably hit 92% in 2011 and could reach 116.7% by 2013.

“Germany does benefit from flight to quality flows,” explained Egan, adding that mathematics doesn’t lie, and eventually, someone will have to pay the bill. “The major positive German has realized over the past year has been the significant decline in its funding costs, […] the two-year debt yield has declined from 2% to near 0 while the 10-year has declined from above 3% to below 2%,” read the report.

Read moreEgan-Jones Downgrades Germany’s Credit Rating From AA To AA-

S&P Cuts France’s Credit Rating – 9 EU Nations See Ratings Cut

See also:

Marc Faber’s Latest Rant On Global Monetization Wars (Video)

… the majority of European nations deserve a CCC rating …

The Real Dark Horse: S&P’s Mass Downgrade FAQ May Have Just Hobbled The European Sovereign Debt Market


France’s credit rating downgraded in latest blow to euro zone (The Globe and Mail, Jan. 13, 2012):

The euro zone’s worst-case scenario of recession and default is looming larger after a mass debt downgrade of France and several other countries, and stalled Greek debt restructuring talks.

Standard & Poor’s stripped France of its prized triple-A rating and slashed the ratings of Italy, Spain and six other European countries Friday, continuing a disturbing pattern of the feared becoming reality in Europe’s smouldering debt crisis.

The move Friday crushed nascent hope that the region’s debt woes might finally be easing after successful bond auctions by Spain and Italy earlier in the week.

The most immediate problem for the euro zone is that France – its second largest economy – will now face significantly higher borrowing costs just as the region slides into recession.

Equally important, the downgrade makes it more expensive for the European Financial Stability Fund to raise cash because France is the fund’s No. 2 backer behind Germany. The EFSF, set up in 2010, is due to raise money in the markets on Tuesday.

Read moreS&P Cuts France’s Credit Rating – 9 EU Nations See Ratings Cut

The Real Dark Horse: S&P’s Mass Downgrade FAQ May Have Just Hobbled The European Sovereign Debt Market

From the article:

S&P may have just killed the European sovereign market by saying out loud what only “fringe bloggers” dared suggest in the past.


The Real Dark Horse – S&P’s Mass Downgrade FAQ May Have Just Hobbled The European Sovereign Debt Market (ZeroHedge, Jan. 13, 2012):

All your questions about the historic European downgrade should be answered after reading the following FAQ. Or so S&P believes. Ironically, it does an admirable job, because the following presentation successfully manages to negate years of endless lies and propaganda by Europe’s incompetent and corrupt klepocrarts, and lays out the true terrifying perspective currently splayed out before the eurozone better than most analyses we have seen to date. Namely that the failed experiment is coming to an end. And since the Eurozone’s idiotic foundation was laid out by the same breed of central planning academic wizards who thought that Keynesianism was a great idea (and continue to determine the fate of the world out of their small corner office in the Marriner Eccles building), the imminent downfall of Europe will only precipitate the final unraveling of the shaman “economic” religion that has taken the world to the brink of utter financial collapse and, gradually, world war.

Here are the key take home messages from the FAQ (source):

Read moreThe Real Dark Horse: S&P’s Mass Downgrade FAQ May Have Just Hobbled The European Sovereign Debt Market

Marc Faber’s Latest Rant On Global Monetization Wars (Video)

Faber’s Latest Rant On Global Monetization Wars (ZeroHedge, Jan. 13, 2012):

There is a little for everyone in Marc Faber’s latest appearance on CNBC. The infamous boomer (and doomer) believes (as we do) that today’s downgrades are less significant for stocks (at least until the realization that banks and more importantly insurance companies are about to be cut as well – keep a close eye out on Allianz and Generali (of ASSGEN fame) – it is not incidental that they are abbreviated to A&G, just one letter away from our own AIG) as it is largely priced in but the equity market’s rally of the last few weeks (with its lack of breadth and volume) is strongly suggestive of a bear-market rally (as opposed to the decoupling bull market that so many hope for). His view quite simply is that the ECB has undergone a backdoor monetization and without this the EUR would be significantly stronger especially given the huge short-interest (though he sees the trend for EUR is down). However, he remains unenthusiastic at the inevitable outcome – suggesting the majority of European nations deserve a CCC rating (which is clearly not priced in) and that the USA should not be AAA (noting that even Germany has huge unfunded liabilities as it writes check after check to save its socialist sorority sisters).

Admitting that he was wrong on US Treasuries (short) last year, he still worries of the long-term value in holding the ponzi-paper and addresses what seemed like the theory-du-jour that a weaker EUR is good for European exports and so all-is-well in the world by pointing out (among other things) that many large European corporations have huge amounts of USD-denominated debt making their debt servicing costs much higher. His perspective on Europe is interesting, concerned that we may see one country say enough-is-enough and leave the Euro, he believes the US outperformance over Europe will unwind and that quality companies in Europe and Emerging Markets are the place to be for investors. Noting that they are admittedly not compelling values he points to the difficulty of valuing anything in a zero-interest rate environment. The worse the global economy looks, the weaker the Chinese economy performs,  and the more the reaction will be money printing which will lift equity prices (whereas the real economy is faltering and standards of living going down fast) leaving him holding gold at the core but realizing stocks will rise nominally.

Finally, his “black swan” scenario is some country saying “we’ve had enough. We are exiting the euro.” Which brings us to the issue of the Greek coercive restructuring which now appears to be just a matter of weeks if not days away. And once Greece pulls the plug, and the Eurozone does not implode (hypothetically), it will set an example whereby more and more countries do the same, until finally the system does crash under its own weight, as everyone does a CDS-triggering restructuring, in effect tearing the Eurozone from the inside.

Moody’s Downgrades French Banks (Telegraph) – Eurozone Banking System On The Edge Of Collapse (Telegraph) – EU Summit: This Emergency Plan Is Great News – If You’re A Bank (Guardian)

Flashback ( on ECB’s Mario Draghi):

ECB’s Mario Draghi: We Need Fiscal Union (= EUSSR), Not Bank Intervention

Former Goldman Sachs Managing Director Mario Draghi Appointed European Central Bank President!

Mario Draghi (Wikipedia):

Draghi was then vice chairman and managing director of Goldman Sachs International and a member of the firm-wide management committee (2002–2005). A controversy existed on his duties while employed at Goldman Sachs. Pascal Canfin (MEP) asserted Draghi was involved in swaps for European governments, namely Greece, trying to disguise their countries’ economic status.


 

French banks downgraded by Moody’s (Telegraph, Dec. 9, 2011):

Moody’s has downgraded BNP Paribas, Societe Generale, and Credit Agricole warning their creditworthiness is being damaged by the fragile operating environment for European banks.

The agency cut its ratings on the long-term debt of BNP and Credit Agicole by one notch to Aa3, concluding reviews that began in June and were continued in September. Societe Generale’s long-term debt was cut by one notch to A1.

The downgrades were driven by the increasing difficulties the banks were having in raising funding and the worsening economic outlook, Moody’s said.

The news comes a day after the European Banking Authority (EBA), warned the region’s banks must find €114.7bn of extra capital in order to withstand the euro zone debt crisis and restore investor confidence.

Moody’s said its ratings did take into account the fact that all three French banks were likely to benefit from state support if the crisis deepened.

“Liquidity and funding conditions have deteriorated significantly,” said Moody’s, adding that the banks have historically relied on wholesale funding markets.

“The probability that the will face further funding pressures has risen in line with the worsening European debt crisis.”

Eurozone banking system on the edge of collapse (Telegraph, Dec. 9, 2011):

Senior analysts and traders warned of impending bank failures as a summit intended to solve the European crisis failed to deliver a solution that eased concerns over bank funding.

The European Central Bank admitted it had held meetings about providing emergency funding to the region’s struggling banks, however City figures said a “collateral crunch” was looming.

“If anyone thinks things are getting better then they simply don’t understand how severe the problems are. I think a major bank could fail within weeks,” said one London-based executive at a major global bank.

Many banks, including some French, Italian and Spanish lenders, have already run out of many of the acceptable forms of collateral such as US Treasuries and other liquid securities used to finance short-term loans and have been forced to resort to lending out their gold reserves to maintain access to dollar funding.

“The system is creaking. There is a large amount of stress,” said Anthony Peters, a strategist at Swissinvest, pointing to soaring interbank lending rates.

Read moreMoody’s Downgrades French Banks (Telegraph) – Eurozone Banking System On The Edge Of Collapse (Telegraph) – EU Summit: This Emergency Plan Is Great News – If You’re A Bank (Guardian)

S&P Downgrades British Banks And 6 Biggest US Banks, Rates China Banks Higher Than US Rivals

S&P downgrades British and US banks (Telegraph, Nov, 30, 2011):

Royal Bank of Scotland, Barclays and HSBC were among a slew of global banks that had their credit ratings cut by ratings agency Standard & Poor’s late last night.

S&P downgrades 6 biggest US banks (CBS News, Nov, 30, 2011):

(MoneyWatch) —Standard & Poor’s ratings service has cut the ratings of the six largest U.S. bank holding companies by one notch. JP Morgan Chase went from A+ to A; Goldman Sachs, Bank of America, Morgan Stanley and Citigroup were downgraded from A to A-; and Wells Fargo was cut from AA- to A+. Among the eight largest banks, only Boston-based State Street escaped unscathed.

The downgrades were part of more than 37 ratings of large global banks reviewed by the agency. S&P said that it had applied new standards to its methodology that focus on how institutions manage their businesses under market and economic stress. The new standards prompted a downgrade of 15 banks. Downgrades often raise the cost of borrowing for companies, as investors demand a higher interest rate to compensate them for additional risk.

Read moreS&P Downgrades British Banks And 6 Biggest US Banks, Rates China Banks Higher Than US Rivals

S&P Reviews 37 Global Banks, Downgrades Bulk – Full List Attached

Standard And Poors Reviews 37 Global Banks, Downgrades Bulk – Full List Attached (ZeroHedge, Nov. 29, 2011):

Bank of America now precisely at $5.00 following an after hours downgrade from A to A-. We note that BofA’s CDS widened 10bps today while MER CDS widened 18bps and notably wider (we haven’t seen runs post downgrade) and we wonder how this will impact the firm’s huge derivative book which was recently moved to the Bank’s higher rated, and deposit backed unit for its better rating support. In fact, following such a drastic action, it is quite likely that derivatives units across the board will see counterparties scrambling to demand a far greater cash cushion for fears of the same downgrade waterfalls that took down AIG and MF Global.

Read moreS&P Reviews 37 Global Banks, Downgrades Bulk – Full List Attached

Moody’s Downgrades Italy’s Credit Rating By 3 Notches From Aa2 To A2 With A ‘Negative Outlook’

Italy downgrade deepens contagion fears over euro debt crisis (Guardian, Oct. 4, 2011):

Ratings agency Moody’s slashes Italy debt rating by three points, increasing pressure on European governments trying to contain financial crisis.

Italy’s sovereign debt rating has been cut for the second time in as many weeks, with ratings agency Moody’s citing “sustained and non-cyclical erosion of confidence” as it slashed its forecast for the country.

In a report released after US stock markets closed on Tuesday, Moody’s downgraded Italy’s government bond ratings from Aa2 to A2 with a “negative outlook”, suggesting further cuts could be to come. The move threatens to increase Italy’s cost of borrowing, and will add yet more pressure to European finance ministers now wrestling with a financial crisis that has spread across the continent.

Read moreMoody’s Downgrades Italy’s Credit Rating By 3 Notches From Aa2 To A2 With A ‘Negative Outlook’

S&P And Fitch Downgrade New Zealand’s Credit Rating

New Zealand hit with double ratings downgrade (AFP, Sep. 30, 2011):

WELLINGTON — Standard & Poor’s and Fitch Ratings both downgraded New Zealand’s sovereign rating, in a move the government said was “ugly” but reflected wider turmoil in world debt markets.

Analysts on Friday said the downgrade made New Zealand only the second Asia Pacific country after Japan to have its rating cut amid the sovereign debt crisis centred on Europe.

Fitch cut New Zealand’s long-term foreign currency rating one notch to “AA” from “AA+” and the long-term local currency rating to “AA+” from “AAA”, with S&P following suit several hours later.

Both Fitch and S&P blamed New Zealand’s soaring external debt, which hit 70 percent of annual gross domestic product (GDP) in June, for the rating cut, with S&P also citing the huge cost of rebuilding earthquake-hit Christchurch.

Read moreS&P And Fitch Downgrade New Zealand’s Credit Rating

French Banks May Be Downgraded By Moody’s As Soon As This Week

French Banks Poised for Moody’s Downgrade (Bloomberg, Sep 11, 2011):

BNP Paribas (BNP) SA, Societe Generale SA and Credit Agricole SA (ACA), France’s largest banks by market value, may have their credit ratings cut by Moody’s Investors Service as soon as this week because of their Greek holdings, two people with knowledge of the matter said.

Moody’s placed the three banks’ ratings on review in June to examine “the potential for inconsistency between the impact of a possible Greek default or restructuring and current rating levels,” the rating company said at the time. Cuts are likely as the review period concludes, said the people, who declined to be identified because the matter is confidential.

Read moreFrench Banks May Be Downgraded By Moody’s As Soon As This Week

Moody’s Downgrades Japan’s Credit Rating From Aa2 To Aa3

Moody’s Downgrades Japan From Aa2 To Aa3 (ZeroHedge, Aug 23, 2011):

What was that word Freud used when you are a weak, pathetic, corrupt, powerless, piece of anachronistic filth and instead of doing the right thing (for fear of losing your job or worse), you lash out at a weaker and irrelevant substitute? Oh yes, projection.

Moody’s lowers Japan’s government rating to Aa3; outlook stable

Singapore, August 24, 2011 — Moody’s Investors Service today lowered the Government of Japan’s rating to Aa3 from Aa2, concluding the rating review that began on May 31. The outlook is stable.

The rating downgrade is prompted by large budget deficits and the build-up in Japanese government debt since the 2009 global recession. Several factors make it difficult for Japan to slow the growth of debt-to-GDP and thus drive this rating action.

Read moreMoody’s Downgrades Japan’s Credit Rating From Aa2 To Aa3

SENIOR ANALYST AT MOODY’S: Ratings Agency Rotten To Core With Conflicts And Corruption

MOODY’S ANALYST BREAKS SILENCE: Says Ratings Agency Rotten To Core With Conflicts (Business Insider, Aug. 19, 2011):

A former senior analyst at Moody’s has gone public with his story of how one of the country’s most important rating agencies is corrupted to the core.

The analyst, William J. Harrington, worked for Moody’s for 11 years, from 1999 until his resignation last year.

From 2006 to 2010, Harrington was a Senior Vice President in the derivative products group, which was responsible for producing many of the disastrous ratings Moody’s issued during the housing bubble.

Harrington has made his story public in the form of a 78-page “comment” to the SEC’s proposed rules about rating agency reform, which he submitted to the agency on August 8th. The comment is a scathing indictment of Moody’s processes, conflicts of interests, and management, and it will likely make Harrington a star witness at any future litigation or hearings on this topic.

The primary conflict of interest at Moody’s is well known: The company is paid by the same “issuers” (banks and companies) whose securities it is supposed to objectively rate. This conflict pervades every aspect of Moody’s operations, Harrington says. It incentivizes everyone at the company, including analysts, to give Moody’s clients the ratings they want, lest the clients fire Moody’s and take their business to other ratings agencies.

Read moreSENIOR ANALYST AT MOODY’S: Ratings Agency Rotten To Core With Conflicts And Corruption

World Is Witnessing Financial WW III (Video)

World is witnessing financial WWIII – Max Keiser (RT, August 11, 2011):

Following the loss of the US’s triple-A credit score which sparked sell-offs on global markets, a new war using financial derivatives has been waged, which by no means can bear the name of WWIII, financial analyst Max Keiser told RT.

Investors however remain unconvinced the country’s finances are solid enough. Problems in the Eurozone will be up for discussion by the French and German leaders next week.

Max Keiser, financial analyst and host of the Keiser Report on RT, said French banks are now loaded with toxic derivatives that were sold to them by US investment banks.

“The US investment banks and the rating agencies are now attacking these French banks. They know where the bodies are buried, and they are using the weapons they sold them to attack them,” he said. “The rating will be downgraded again. This is part of a new era on Wall Street – they go after sovereign debt. Wall Street and rating agencies are working together to destabilize the sovereign debt of these countries,” he added.

Read moreWorld Is Witnessing Financial WW III (Video)