Best of the Week
Most Popular
1.US Paving the Way for Massive First Strike on North Korea Nuclear and Missile Infrastructure - Nadeem_Walayat
2.Trump Reset: US War With China, North Korea Nuclear Flashpoint - Video - Nadeem_Walayat
3.Silver Junior Mining Stocks 2017 Q2 Fundamentals - Zeal_LLC
4.Soaring Inflation Plunges UK Economy Into Stagflation, Triggers Government Pay Cap Panic! - Nadeem_Walayat
5.The Bitcoin Blueprint To Your Financial Freedom - Sean Keyes
6.North Korea 'Begging for War', 'Enough is Enough', is a US Nuclear Strike Imminent? - Nadeem_Walayat
7.Bitcoin Hits All-Time High and Smashes Through $5,000 As Gold Shows Continued Strength - Jeff_Berwick
8.2017 is NOT "Just Another Year" for the Stock Market: Here's Why - EWI
9.Gold : The Anatomy of the Bottoming Process - Rambus_Chartology
10.Bitcoin Falls 20% as Mobius and Chinese Regulators Warn - GoldCore
Last 7 days
The Greatest Investing Lesson Learned from the 1987 Stock Market Crash - 20th Oct 17
Stock Market Time to Go All-in. Short, That Is - 19th Oct 17
How Gold Bullion Protects From Conflict And War - 19th Oct 17
Stock Market Super Cycle Wave C May Have Started - 19th Oct 17
Negative Expectations, Will the Stock Market Correct? - 19th Oct 17
Knowing the Factors Affect your Car Insurance Premium - 19th Oct 17
Getting Your Feet Wet In Crypto Currencies - 19th Oct 17
10 Years Ago Today a Stocks Bear Market Started - 19th Oct 17
1987 Stock Market Crash 30th Anniversary Greatest Investing Lesson Learned - 19th Oct 17
Virgin Media Broadband Down, Catastrophic UK Wide Failure! - 19th Oct 17
The Passive Investing Bubble May Trigger A Massive Exodus from Stocks - 18th Oct 17
Gold Is In A Dangerous Spot - 18th Oct 17
History Says Global Debt Levels Will Lead to Another Crisis - 18th Oct 17
Deflation Basics Series: The Quantity Theory of Money - 18th Oct 17
Attractive European Countries for Foreign Investors - 18th Oct 17
Financial Transcription Services – What investors should know about them - 18th Oct 17
Brexit UK Vulnerable As Gold Bar Exports Distort UK Trade Figures - 18th Oct 17
Surge in UK Race Hate Crimes, Micro-Racism, Sheffield, Millhouses Park, Black on Asian - 18th Oct 17
Comfortably Numb: Surviving the Assault on Silver - 17th Oct 17
Are Amey Street Tree Felling's Devaluing Sheffield House Prices? - 17th Oct 17
12 Real-Life Techniques That Will Make You a Better Trader Now - 17th Oct 17
Warren Buffett Predicting Dow One Million - Being Bold Or Overly Cautious? - 17th Oct 17
Globalization is Poverty - 17th Oct 17
Boomers Are Not Saving Enough for Retirement, Neither Is the Government - 16th Oct 17
Stock Market Trading Dow Theory - 16th Oct 17
Stocks Slightly Higher as They Set New Record Highs - 16th Oct 17
Why is Big Data is so Important for Casino Player Acquisition and Retention - 16th Oct 17
How Investors Can Play The Bitcoin Boom - 16th Oct 17
Who Will Be the Next Fed Chief - And Why It Matters  - 16th Oct 17
Stock Market Only Minor Top Ahead - 16th Oct 17
Precious Metals Sector is on Major Buy Signal - 16th Oct 17
Really Bad Ideas - The Fed Should Have And Defend An Inflation Target - 16th Oct 17
The Bullish Chartology for Gold - 15th Oct 17
Wikileaks Mocking US Government Over Bitcoin Shows Why There Is No Stopping Bitcoin - 15th Oct 17
How to Wipe Out Puerto Rico's Debt Without Hurting Bondholders - 15th Oct 17
Gold And Silver – Think Prices Are Manipulated? Look In The Mirror! - 15th Oct 17
Q4 Pivot View for Stocks and Gold - 14th Oct 17
Gold Mining Stocks Q3’17 Preview - 14th Oct 17
U.S. Mint Gold Coin Sales and VIX Point To Increased Market Volatility and Higher Gold - 14th Oct 17
Yuan and Gold - 14th Oct 17
Tips for Avoiding a Debt Meltdown - 14th Oct 17
Bitcoin Hits New All-Time High Above $5,000 As Lagarde Concedes Defeat and Jamie Demon Shuts Up - 13th Oct 17
Golden Age for GOLD, Dark Age for the Stock Market - 13th Oct 17
The Struggle for Bolivia Is About to Begin - 13th Oct 17
3 Reasons to Take Your Invoicing Process Mobile - 13th Oct 17
What Happens When Amey Fells All of a Streets Trees (Sheffield Tree Fellings) - Video - 13th Oct 17
Stock Market Charts Show Smart Money And Dumb Money Are Moving In Opposite Directions—Here’s Why - 12th Oct 17
Your Pension Is a Lie: There’s $210 Trillion of Liabilities Our Government Can’t Fulfill - 12th Oct 17
Two Highly Recommended Books from Bob Prechter - 12th Oct 17

Market Oracle FREE Newsletter

3 Videos + 8 Charts = Opportunities You Need to See - Free

Italian Prosecutor Charges Fitch and S&P Employees With Culpable Incompetence

Interest-Rates / Credit Crisis 2012 Nov 14, 2012 - 03:51 AM GMT

By: Andrew_Butter

Interest-Rates Best Financial Markets Analysis ArticleI noticed that the public prosecutor in some remote corner of Italy is attempting to get a clutch of hapless employees of S&P and Fitch charged with…well I‘m not quite sure what? Public disorder…incompetence…economic terrorism…driving whilst under the influence of America?


Apparently about a year ago they downgraded Italy, which caused a bit of a stir, particularly since they released the news when the markets were open and didn’t warn the Italian government they were going to do that. Fitch of course are denying all charges, they maintain that they have the right to be as incompetent as they like and if they want to stamp AAA on the rump of a collateralized debt obligation lovingly fabricated by God’s Workers, prior to being sold to pension funds run by dumb foreigners who don’t read English too good, then that is up to them, particularly if they make good fees doing that.

I took a view on the Italian 10-Year eighteen months ago when the yield hit 6%, I said “BUY”, as is illustrated by this chart; http://seekingalpha.com/article/283240-it-s-a-good-time-to-buy-italy-s-debt

OK, that’s not one of my best predictions (not the worst either, I got gold more wrong than that in the past). And well, if you bought at 6% then and held, you would still be in the money, although you might have had a few moments of nervousness on the way; but if you had sold a month later at 5% (well I’m not going to give the whole story away am I?)…and then gone back in again at 6% you would have double-dipped.

There again my prediction of a fall to 4% in a year was, let’s say, somewhat optimistic; although there was an element of winding up the doomsayers in that, how many times must a doomsayer say the world is going to end…before it ends? There again also, if those economic terrorists from S&P and Fitch had not stepped in and started manipulating the market and spreading fear and panic for their own evil-ends, my prediction might have worked out. Personally I think they should be dressed up in orange jump-suits and blindfolds and get sent to Guantanamo for some good-old-fashioned water-boarding.

I noticed in the reports that one of the hapless Fitch incompetents apparently put out a memo that said Italian debt is owed mainly by foreigners, as I said, and as one of the less incompetent analysts at Fitch pointed out to the more incompetent one; that is not true. I say again:

  1. Total Italian debt burden (private plus public) is 250% of GDP (compared with over 350% in USA). Granted the public debt is 120% of GDP, but over 50% of that is owed to Italians living in Italy; hardly a flight-risk.
  2. Net external liabilities are 15% of GDP compared with more than 100% for Portugal and Greece.
  3.  The country makes things, it has tourism and it has opera, and food and football, and guys who live with their mom until they get married; until recently its trade deficit was negligible (goods + services). Right now that’s about 2% of GDP mainly due to having to buy oil on the spot market to replace oil traditionally supplied by Libya. By comparison, USA’s trade deficit is about 3.5% of GDP (last four quarters).

There was never any doubt that the Europeans would figure out a way to get around the rules so they could do a TALF (not a TARP), just like I predicted Mein Liebste Angela bless her heart would do in September 2011, http://www.marketoracle.co.uk/Article30719.html

So I guess the world hasn’t quite come to an end and no one is using wheelbarrows or the electronic equivalent to buy groceries, just yet. Well fancy that? Of course the world could end tomorrow, now that’s something to look forward to.

With regard to the charges, the prosecutor says he has a strong case, and indeed it’s easy to see how a charge of incompetence by rating agencies, could fly. But is incompetence a crime?

Now that’s an interesting one, imagine the defense of the 9/11 mastermind. ”Well your honor I just told them to fly around and cause fear and panic, the fact they flew into a building is just because they were incompetent, how can you say that’s my fault?”

By Andrew Butter

Twenty years doing market analysis and valuations for investors in the Middle East, USA, and Europe. Ex-Toxic-Asset assembly-line worker; lives in Dubai.

© 2012 Copyright Andrew Butter- All Rights Reserved


Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

Andrew Butter Archive

© 2005-2017 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

Catching a Falling Financial Knife