OTA Berlin Apartments

 

 

Yesterday, on Monday, the American ratings agency Moody’s lowered the credit futures from “stable” to “negative” of three EU countries – Germany, the Netherlands and Luxembourg.

Germans are  in no mood to deal with opportunist Moodys, a detached and biased market analyst based on another continent who thinks it can just run rough-shod over other peoples – in this case European – economies. And all of this with very definite underlining political motives behind their actions.

Moodys is part of that American doom-sayers trio – the hated American rating agencies– the three horsemen of the Apocalypse, the so-called ‘Big Three’ US credit rating agencies Standard & Poor’s, Moody’s Investor Service and Fitch Ratings. [read my previous blog article of one year ago reprinted below which is still as valid today -http://www.ota-berlin.de/blog/07/28/the-3-hated-american-horsemen-of-the-apocalypse-standard-poors-moodys-and-fitch-ratings-%E2%80%93-continue-to-cause-mischief-in-europe-commentary-by-emil-hoogensteyn/

European stock markets reacted without any direct negative effects to the unexpected news – political Berlin has just shrugged off the news. The government has stated that Germany’s solid economic and financial policy, and continue play its role as the anchor in the euro zone responsibly. Germany will retain its 'safe haven' status in spite of what any detached American or other agency may or may not think.

German government, markets cool to Moody's ratings outlook - writes DW -http://www.dw.de/dw/article/0,,16121393,00.html

While Germany continues to find itself in a very solid economic and financial situation and even if there remains the problem Greece, of Italy and Spain. The burden of any bailout packages for any one of these 3 countries would fall heavily all Euro-zone countries – or so reasons Moodys.

Although the 3 nations will keep their AAA ratings, Moody's thinks that the 3 countries will face too many unforeseen risks from a possible Greek credit default and from potential bailouts for Italy and/or Spain.

Spiegel, has reported that by Moody's decision …”to cut its outlook for Germany's triple-A rating to negative could stiffen German resistance to providing more financial assistance to Greece, which is asking for more time to meet the conditions of its bailout.” http://www.spiegel.de/international/europe/german-reaction-to-moody-s-outlook-cut-for-german-triple-a-rating-a-846172.html

The Guardian picked up on the ever bumbling and incoherant FDP leader - "In Berlin, there were more signs that German politicians have lost patience in Greece. However, there was also a backlash against Philipp Rösler, for claiming over the weekend that a Greek exit was manageable. Greek PM Antonis Samaras led the way, attacking EU officials for attempting to sabotage Greece." http://www.guardian.co.uk/business/2012/jul/24/eurozone-crisis-germany-moodys-spain-auction

See also from Berlin the English paper 'The Local" - http://www.thelocal.de/money/20120724-43929.html

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If one were to believe the American doom-sayers the hated American rating agencies– the three horsemen of the Apocalypse, the so-called ‘Big Three’ US credit rating agencies Standard & Poor’s, Moody’s Investor Service and Fitch Ratings – then the whole Euro-zone has joined the ranks of the European basket cases whose sovereign debt is going to be rated as junk.

It is clear that when the economy of one member of the Euro-zone sinks, it can drag the Euro down across the entire continent.

However not only the Americans can play this game and it is becoming increasingly evident that the’ Yurpians’ [George W Bush] are planning a strategy to combat or at least neutralize the negative effects of these rating agencies on their own turf.

The Chinese are already downgrading US debt! http://www.zerohedge.com/article/rating-agency-wars-2-evil-empire-strikes-back-dagong-says-likely-downgrade-us-even-if-debt-l

The US national debt does not a pretty picture make -to follow the gruesome extent of the US national debt – http://brillig.com/debt_clock/ and for a 2010 comparison to other countries -http://www.economicshelp.org/blog/economics/list-of-national-debt-by-country/.

If a European ratings agency did exist with the same clout as the 3 American ones presently have, then they could equally rate individual American states like California [ presently in debt to about 20 billion Euro] and down grade them. It could then also downgrade US national debt with a concomitant ‘flight of safety’ to the Euro or maybe even more to the Canadian dollar and/or the Swiss Franc.

The fact that these three rating institutions are located in the UK and US and not in continental Europe should be seen by everyone as a huge red flag.

In the past when investors have departed from US treasuries Anglo/American owned ratings houses pick another Euro state to downgrade – this then conveniently sends these investors and their monies back into US treasuries – or so it has been in the past.

However even now in the US people are asking who are these so-called financial luminaries from upon high to tell the US and others exactly how much debt they should shed and by when.

When Wall Street collapsed in winter 2007, these same rating agencies were handing out their highest AAA ratings to some of the most dubious and riskiest mortgage-backed securities – and thus earning enormous fees in the bargain.

Now Standard and Poors has the temerity to even suggest a downgrade of US debt.

Where were these same so-called financial worthies when President George W. Stupid turned a $5 trillion budget surplus handed to him on a plate by outgoing president Bill Clinton into a gaping deficit?

The two main drivers of the US deficit under Bush were the tax cuts for the rich and two needless wars in Iraq and Afghanistan, which have added and continue to add $1.8tn and $1.4tn to the US national debt respectively.

By comparison the proposed Obama-era stimulus spending, which would add circa $700billion to the federal budget deficit, and even his healthcare reforms are really not in the same league.

In terms of the deficits, the George W. Stupid policies were much more damaging than anything Obama has proposed. [ http://www.bushtothehague.org/ ]

 

Had these rating agencies done their job properly, there would not have been the debt and housing bubbles in the US to begin with and the resulting taxpayers bailouts of both Wall Street and European banks.

 

German Chancelor Merkel is calling for an independent European rating agency as are EU president Barosso and German Finance Minister Wolfgang Schäuble who all think that the Anglo/US-based rating agencies are biased against Europe.

To read more about this there is an excellant article in the UK INDEPENDENT -

Previous articles on this subject on this blog – http://www.ota-berlin.de/blog/07/25/merkel-and-sarkozy-met-in-berlin-agreement-to-end-euro-zone-debt-crisis-generally-welcomed-by-markets-euro-value-stabil-for-the-time-being/