Nine Euro Nations’ Ratings Cut, Seven Affirmed by S&P

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http://www.bloomberg.com/news/2012-01-13/france-to-lose-aaa-from-s-p-afp-says-citing-state-official.html

France and Austria lost their top credit ratings at Standard & Poor’s in a string of downgrades that left Germany with the euro area’s only stable AAA grade, hindering leaders’ efforts to stem the region’s fiscal crisis.

France and Austria were cut one level to AA+ from AAA and face the risk of further reductions, the rating company said in Frankfurt today. While Finland, the Netherlands and Luxembourg kept their AAA ratings, they were put on negative watch. Spain and Italy were also downgraded. The first gauge of the report’s impact will come on Jan. 16 when France sells as much as 8.7 billion euros ($11 billion) in bills.

“In our view, the policy initiatives taken by European policy makers in recent weeks may be insufficient to fully address ongoing systemic stresses in the euro zone,” S&P said in a statement.

S&P acted at the end of a week in which signs grew that Europe’s woes may be cresting as borrowing costs fell, evidence of economic resilience emerged and the European Central Bank said it had quelled a credit crunch at banks. While France’s downgrade may make it harder for the euro region’s bailout fund to raise money in financial markets, the immediate impact on French and Italian bond yields was muted.

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1. who made S&P goddess? time to eliminate its influences nt

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2. FRAUD ALERT: STOP THE TRIPPLE-A-RATED JUNK FACTORY

“Companies that made bad credit calls disappeared, sold themselves in an undignified manner or, at best, exist in a diminished capacity. The rating agencies, incredibly, continue to give opinions.”

This is what Arturo Cifuentes, a Principal with Atacama Partners, said some three years ago. His words now bear more potence when put against the background of the current eurozone debt crisis. In the past 2 years we have watched as members of the animal farm were lined up and, one after the other, they were called to the front and their arses were spanked red- just for kicks. Even as Ireland vehemently protested that they were not Greece, rating agencies begged to differ, and the bond traders backed them to the hilt. Today's action by rating agencies is proof this hazing ritual is not going to stop any time soon. At least not until all Greeks are properly accounted for. Leading the manhunt is none other than Moodys, Fitch and S&P, the same detectives whose most recent report card reads: 10%. Very poor. This article perhaps makes it all clear. And by the way, what happened to the good old free market?

Because ratings agencies create a command economy. Perhaps not the same as that of Stalin's Communist Russia, but a command economy nevertheless. For the avoidance of doubt, a free market is one where people make their own decisions based on their own judgements, not on the recommendation of some all-knowing god. If all ratings agencies did was to collect and publish data on who has defaulted on their debt or who is up-to-date on their payments, that would be fine. But their dubious mandate to make qualitative decisions which are binding to market participants is at odds with a free market.