Wednesday, April 28, 2010

Agog, with Hands on Hips Akimbo

I silently hum “Don’t cry for me Argentina” when I hear this stuff:

BRUSSELS — European Union officials Wednesday were unable to mask their frustration with the downgrade of Greek debt by Standard & Poor’s to junk status.
“Who is Standard & Poor’s by the way?” asked Amadeu Altafaj
Oh piffle! Aren’t they something like People Magazine or something?

I mean, who’s this Amadeu Altafaj, anyway?
the spokesman for Olli Rehn, the E.U. monetary affairs commissioner, as he took the podium at a regular midday news briefing at the European Commission.
I guess they don’t teach that “you should actually know the subject” stuff at spokesman school. It gets better though, because it seems what they really want is that agencies DON’T rate anything in Europe, so as to put a Bund/Greek size yield gap between what their paper is really worth, versus what they wish it was worth.
Chantal Hughes, the spokeswoman for Michel Barnier, the E.U. commissioner for the internal market, then delivered a thinly veiled warning to agencies like Standard & Poor’s at the same news conference.

“We would expect that when credit rating agencies assess the Greek risk, they take due account of the fundamentals of the Greek economy and the support package prepared by the E.C.B., I.M.F. and Commission,” Ms. Hughes said. “And we of course expect that credit rating agencies, like other financial players, and in particular during this difficult and sensitive period, act in a responsible and rigorous way.”
I think they’re likely pricing in the Greek government’s ability and willingness to actually pay out on those maturities, actually, regardless of how much they can borrow from anyone else.
The E.U. passed new regulations for credit rating agencies last year after blaming them for significantly contributing to problems in the financial markets over the past two years and, in particular, for underestimating risks associated with complex financial instruments.
Which is alright, so long as you don’t price the risk on them.

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