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  #81  
Old 08-05-2011, 10:08 AM
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Italy increases confidence in its debt by investigating credit analysts

http://www.cnbc.com/id/44031015

Quote:
The big ratings agencies have been blamed for much during the credit crisis, but they hadn't been raided by any of the countries they've threatened with downgrades, until Wednesday.

Now three Standard & Poor's analysts and one from Moody's are under investigation by Italian police.

Prosecutor Michele Ruggiero, from the small Italian town of Trani, told CNBC that the four were being investigated.

Legal representatives at the agencies' Milan office, while they are not held directly responsible, need to be added to the probe according to Italian law.

"The probe was initiated by very specific complaints by consumer groups," Ruggiero told CNBC.

....
The current investigation came after consumer groups objected to the agencies warning that they were considering downgrading Italian sovereign debt.

The Moody's analyst is being investigated over events in May 2010, while the S&P analysts' actions between 20 and 23 May 2011 and beginning of July 2011 are being probed.

Elio Lannutti, president of Adusbef, one of the consumer groups that sparked the inquiry, said: "The three 'sisters' – Standard & Poor's, Moody's and Fitch – are an erratic danger to state sovereignty in the areas of economics and finance".

Several mass selloffs on the Italian stock market in the past month show how shaky Italy's international reputation is at the moment.

And we know how trustworthy "consumer groups" are!

Anyway, I applaud Italy for its creativity in solving its reputation problem. By making it worse.
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  #82  
Old 08-05-2011, 09:05 PM
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White House fighting possible downgrade: report

http://www.google.com/hostednews/afp...8109ec0b93.1f1

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WASHINGTON Standard & Poor's has informed the US government it plans to issue an unprecedented downgrade of the US credit rating from its AAA value, but the White House was pushing back against "serious" errors in its analysis, US media reported Friday.

CNN said it had been told by a senior administration official that the ratings agency was planning a downgrade after analyzing the deal to raise the nation's debt ceiling struck earlier this week.

But the White House had found "serious and amateur errors of the S&P analysis," CNN said, citing the official, who added that the agency's figures were off "by trillions of dollars."

"Now the officials say S&P acknowledged some errors and agree to rethink the analysis," CNN added.

ABC television, also quoting an unnamed government official, said the agency was planning a downgrade following the political tumult which surrounded the debt ceiling row resolved at the last minute this week.

It would also point to a Republican refusal to raise taxes to help tackle the huge US budget deficit, the report said.

But ABC also reported that the Obama administration was pushing back against Standard and Poor's. Even though "S&P has acknowledged its numbers are wrong, it's unclear what they're going to do," ABC said on its website.

There was no immediate comment from the White House or the Treasury on the reports, and no indication on when any S&P downgrade would take place. It was also unclear whether a new rating would be graded at AA+ or AA.

A debt downgrade would certainly be a symbolic embarrassment for President Barack Obama, the administration and the United States, and could raise the cost of US government borrowing.

But some analysts have questioned whether a ratings cut would impact demand for US debt, have dismissed the raters as having low credibility, and questioned whether the markets would take much notice.

Ratings agencies Moody's and Fitch both reaffirmed their AAA rating of US debt shortly after Obama signed a bill raising the debt ceiling on Tuesday.

But they warned they were still studying the legislation's deficit-cutting measures to see if they were adequate.

S&P is considered the most influential of the three major rating agencies which also include Moody's and Fitch.

It has been the most aggressive in moving towards a US downgrade. On April 18, S&P lowered its outlook attached to the AAA rating from "stable" to "negative," citing the absence of a credible plan for reducing Washington's huge fiscal deficits.

In July, during the protracted standoff over raising the government's debt ceiling between Obama and Republicans, S&P placed the United States on credit watch and warned there was "at least" a one-in-two chance that it would cut the rating within 90 days.

S&P also suggested any deficit plan needed to trim some $4 trillion over 10 years; the plan that has passed only envisages cuts of up to $2.4 trillion.

There are currently 17 nations boasting an AAA debt rating from S&P along with three other territories -- Hong Kong, Guernsey and the Isle of Man.

Moody's, the oldest credit agency, placed the US on a downgrade watch on July 13 and upheld its rating Tuesday after Congress passed the last-minute deal which avoided a debt default.

But Moody's also added a "negative" outlook to its rating, warning it could still downgrade the United States if the deficit-slashing plan goes astray, if fiscal discipline weakens, or if growth deteriorates significantly.

Fitch opened a review of the US rating on June 8 and said it would be completed by the end of August.

After the debt deal was clinched, Fitch said the United States would keep its AAA rating but warned it was under review.
so what happens if the US loses its AAA rating? also, aren't these the same clowns that gave AAA ratings to the mortgage backed CDOs a few years back?
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  #83  
Old 08-05-2011, 09:18 PM
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Originally Posted by Gonzo View Post
so what happens if the US loses its AAA rating? also, aren't these the same clowns that gave AAA ratings to the mortgage backed CDOs a few years back?
Which also makes this ridiculous. Had they done their jobs, the recession wouldn't have been as severe because of various statutes mandating the purchase of AAA that some companies have. A weaker recession means a smaller deficit and less necessity to pump/print government money (counter cyclical behavior that helps blunt recessions).

It's almost like the rating agencies are saying 'sorry about the recession, we promise to get it right this time ...' *starts another one*
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  #84  
Old 08-05-2011, 09:32 PM
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down to AA+








:notreally:
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  #85  
Old 08-05-2011, 09:35 PM
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Bloomberg Breaking NEWS!!!


Roubini blames Democrats 40% Republicans 60%.
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  #86  
Old 08-06-2011, 09:30 AM
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Maybe the WH should take a page out of Italy's book, and send the FBI into S&P's offices.
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  #87  
Old 08-14-2011, 08:18 PM
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Italy

http://m.dailyherald.com/dailyherald...l=true#display

Quote:
Italian Premier Silvio Berlusconi predicted Saturday his government's emergency austerity package — which raises taxes, cuts political jobs and consolidates small towns — would quickly be passed by parliament.

Berlusconi also said the $64.8 billion package won praise by European leaders including German Chancellor Angela Merkel and by the European Central Bank.
....



Towns with fewer than 1,000 residents will merge with larger communities, a change that affects about 1,970 out of Italy's 8,094 municipalities, according to the government.

These cuts mean about 5,000 elected jobs will be slashed, plus several thousand related jobs, Calderoli said. The measures take effect at the next local elections.

The issue of excessive administration has been a mainstay of the Italian political debate for years. But citizens have expressed new outrage recently that Italy's political class has spared itself from cuts it demanded of others.

Some critics said the measures didn't go far enough, others said they targeted mostly local administrations.

However, national lawmakers saw their "solidarity tax" double compared to other citizens, who face a 5 percent additional tax on income above $128,250 and a 10 percent additional tax on income above $213,750.

Italy already passed a $99 billion austerity package last month, but the financial situation has deteriorated significantly since then. Under intense pressure from the European Central Bank and eurozone leaders, the government agreed to speed its goal of balancing the budget to 2013 instead of 2014, and to come up with structural reforms that stimulate investment and growth.
I'm curious if I'm reading the "solidarity tax" text right -- are legislators taxing themselves at double the rate of other "rich" folks? Because that's how I read:
Quote:
However, national lawmakers saw their "solidarity tax" double compared to other citizens, who face a 5 percent additional tax on income above $128,250 and a 10 percent additional tax on income above $213,750.

Also, I don't see anything about the investigation they've been doing into credit rating agencies. I would love to hear more from the European leaders about the nefarious American rating agencies (except Fitch has French ownership, but never mind that)
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  #88  
Old 09-06-2011, 11:21 AM
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http://www.businessinsider.com/josef...ankfurt-2011-9

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Josef Ackermann just gave a terrifying speech about the fragility of the Euro banking sector right now.

At a conference in Frankfurt he said, "It is an open secret that numerous European banks would not survive having to revalue sovereign debt held on the banking book at market levels."

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  #89  
Old 09-06-2011, 11:37 AM
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That's why the ECB's stress tests were seen as a total farce - they assumed absolutely no sovereign defaults when Greece was already fully engulfed and Ireland and Portugal were smoldering heavily. Greece's 1-year bonds are yielding 82% and the 2-year bonds are over 50%; that's a full expectation of default, not a tremendous investment opportunity. Yields on 10-year bonds for Italy and Portugal are back on the rise again, and Spain is headed there as well.

Once again, we see that mark-to-market values are accurate views of the value of the assets - but only when things are good; otherwise, they're incorrect because [insert your favorite lame excuse here].
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  #90  
Old 09-09-2011, 01:07 PM
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No link needed [though I'm sure we could find one]: stick a fork in Greece - they're done. Default is assured, we're just haggling over the details of how it will go.
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