Tha last meeting/summit in Europe did not really produce anything solid, other than a split with the U.K. So it was only a matter of time before the ratings agencies acted.
Moody's issued this statement today:
Pressure Remains On Euro Area Sovereigns In Absence of Decisive Initiatives
"The communiqué issued by European policymakers after the recent euro area summit offers few new measures and therefore does not change our analysis of the rising threat to the cohesion of the euro area and the further shocks to which it and the wider EU remain prone. As we announced in November, unless credit market conditions stabilise in the near future, our ratings of all EU sovereigns will need to be revisited. The communiqué does not change that view, and we continue to expect to complete such a repositioning during the first quarter of 2012.
Last Friday, European policymakers issued a communiqué announcing additional measures aimed at addressing the formidable challenges facing the euro area. The communiqué discussed at a high level the direction of a variety of initiatives aimed at supporting closer fiscal coordination among euro area (and many EU) sovereigns in the years to come, and at the same time to address the more acute immediate challenges euro area sovereigns and banking systems face. The clear statements it contains affirming the commitment of euro area authorities to work towards a common economic policy provide a further indication of euro area politicians’ desire to move towards centralised fiscal coordination and mutualisation of resource and risk.
In substance, however, the communiqué offers few new measures, and does not change our view that risks to the cohesion of the euro area continue to rise. Measures to strengthen the governance of the EU’s Excessive Deficit Procedure were first announced in the first half of 2011. The intention to introduce measures to strengthen national budgetary frameworks and to improve coordination and cooperation, including a heightened role for the Commission, was announced in October, as was the aim of leveraging the European Financial Stability Facility.
The July package contained very clear statements regarding the uniqueness of private sector involvement (PSI) in Greece’s assistance programme. We placed little weight on those statements then. It is difficult to place greater weight on them now given, for example, the intention to complete the Greek PSI programme, to incorporate Collective Action Clauses in European Stability Mechanism documentation to facilitate orderly PSI in future, and the reference to the application of “IMF principles and practices” which often also involve burden-sharing with private sector creditors.
In short, the communiqué reflects the continuing tension between euro area leaders’ recognition of the need to increase support for fiscally weaker countries and the significant opposition within stronger countries to doing so. Amid the increasing pressure on euro area authorities to act quickly to restore credit market confidence, the constraints they face are also rising. The longer that remains the case, the greater the risk of adverse economic conditions that would add to the already sizeable challenges facing the authorities’ coordination and debt reduction efforts.
As a result, the communiqué does not change our view that the crisis is in a critical, and volatile, stage, with sovereign and bank debt markets prone to acute dislocation which policymakers will find increasingly hard to contain. While our central scenario remains that the euro area will be preserved without further widespread defaults, shocks likely to materialise even under this 'positive' scenario carry negative credit and rating implications in the coming months. And the longer the incremental approach to policy persists, the greater the likelihood of more severe scenarios, including those involving multiple defaults by euro area countries and those additionally involving exits from the euro area.
The credit implications of these and further measures likely to be announced in coming weeks require careful consideration against the backdrop of decelerating regional economic activity, fragile banking systems, partly dysfunctional credit markets, and the varying degree of success of country-specific measures aimed at structural change and fiscal consolidation. But in the absence of credit market conditions stabilising, the system remains prone to further shocks which would likely lead to selective rating changes. More broadly, in the absence of any decisive policy initiatives that stabilise credit market conditions effectively, our intention as announced in November is to revisit the level and dispersion of ratings during the first quarter of 2012".
Monday, December 12, 2011
Moody's And The Latest European Summit Talk: Will Review All Countries Ratings
Subscribe to:
Post Comments (Atom)
Blog Archive
-
▼
2011
(510)
-
▼
December
(46)
- Somebody's Bet: SPX Closes Negative For The 2011 Year
- With Tail Between Its Legs, Verizon Withdraws $2 C...
- Euro Hits New 10-Year Low; To Drop Further in earl...
- Canadian Mortgages Exceed $1T
- Verizon Follows BAC in Bonehead Moves: Charges Fee...
- Gold To Complete 11th Consecutive Annual Gain; Lon...
- Gold to Rise in 2012, To Drop After 2013, But Diam...
- Iran Threatens, Oil Rockets Higher: Profit Either ...
- Brazil Overtakes Britain As World's Sixth Largest...
- Occupy Wall Street: Lego Version
- Investing In 2012: Chile Aims for 6% Growth; Chile...
- Apple's Growth and Glory Now Hurt By Weak Economie...
- QE in Europe: $645B Through The Backdoor of 543 Ba...
- Looking For a Job? Brazil Added 1.9M Jobs So Far T...
- Predictions For 2012: Gold Sideways, Explosive Ral...
- Britain Says No To 200B Euros To I.M.F.
- Research in Motion: RIMM Is Headed To $10 or Lower
- ESPF's Draft Includes A Warning That Euro May Ceas...
- Ontario's Rating Outlook Cut To Negative by Moody's
- RIMM Takes Major Tumble in After-Hours After Earnings
- ECB: There is No External Savior For a Country Tha...
- Italy's 5-Year Bond Yields Hit New Euro Era Record...
- You Cannot Make This Stuff Up: Housing Market Was ...
- Kyle Bass: Inflation Won't Fix Anything; Choices A...
- Gartman Sells Gold and Proclaims Death of Bull: Th...
- Canadians Are Spending Beyond Their Means As Inves...
- Interview With Kyle Bass: Total Wipe-Out Coming
- Moody's And The Latest European Summit Talk: Will ...
- Total Derivatives Market Jump to Over $708 Trillio...
- Moody's Downgrades French Banks
- There is No Excuse for S&P Not To Downgrade Europe...
- Merkel's (Fake?) Twitter: Groundhog Day
- Sarkozy Warns of European Desintegration; Ireland ...
- EuroDominos
- UNG Hits All-Time Low: Options For Tomorrow
- Current Period Is Very Similar to 1929 to 1933; Bi...
- All Roads Lead To Rome, But Italy Can Only Survive...
- Contango Drops: Profitting With UNG Going Up or Down
- S&P Now Puts Europe's EFSF on Negative Credit Watch
- Global Debt Has Risen From $80T to $210T, 12%/Year...
- Italy Stops Inflation Indexing on Pensions: Minist...
- ECB Preparing Another 1T Euro Rescue Plan
- The Social Contract Is Unravelling: Gap Between Ri...
- Facebook To Hire Thousands: Looking for a Job? App...
- Interview With Jim Rogers: Shorts Stocks; QE3 Goin...
- Wall Street Execs Urged Central Banks to Intervene...
-
▼
December
(46)
No comments:
Post a Comment