Death Star Economics



How to fire your rating agency

There won’t be a news brief tomorrow, Friday, 20 April 2012.

Spain continues to explode, as all trust in the government to restore a workable budget deficit is dissolving.

From MarketBeat:

For Spain, the dynamics remain unpleasant. Local banks have, so far this year, been the dominant buyers of Spanish bonds, thanks to the ECB’s big LTRO cash injections into the banking system. Foreigners are all but gone. Before the auction, according to UBS analyst estimates, Spanish banks had just €21 billion in ECB money left, whileSpain needed to borrow another 47 billion over the rest of the year. If Spanish banks are the only buyers, something has to give.

Simultaneously, Spain’s banks are waiting for the repayment of about €144bn of overdue delinquent loans, which only represents a little over 8% of the total loans. And all this while Juan Carlos was hunting elephants in Africa… read article

Here a more general comment on Spain’s situation from Ana Palacioformer Spanish minister of foreign affairsread article

If you are a bank in a country on the permanent brink of a real estate crisis, which coincidently is also home to the third largest mortgage market in the world, and a US rating agency comes along and downgrades your life, chances are, you get a bit pissed off. So did Nykredit, biggest Danish mortgage lender, and fired Moody’s due to its  bitchy volatile behaviorDanske Bank‘s mortgage business did the same in June 2011, and Jyske Bank is looking to join the club as well. read article

Meanwhile, Fitch is threatening to downgrade the Netherlands, which still enjoys AAA status. Can countries fire rating agencies too? read article

Joris Luyendijk talks to a psychoanalyst about the anger at the financial sector [in the comments on his blog]. So thepsychoanalyst goes on to tell the tale of misdirected anger, denial and envy, all of which are probably good points. The first comment on this article strikes back, asking if Luyendijk was going to talk to an astrologist next… read article

So long.


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