Best of the Week
Most Popular
1.BrExit House Prices Crash, Flat or Rally? UK Housing Market Affordability Crisis - Nadeem_Walayat
2.Stocks Bull Market Climbs Wall of Worry, Bubble? When Will it End? - Nadeem_Walayat
3.Gold Price Is Now On Its Way To All-Time Highs - Hubert_Moolman
4.Deutche Bank Stock Price Crash - The EU Has Problems Far Beyond the Brexit - Harry_Dent
5.UK interest Rate PANIC CUT! As Banks Prepare to Steal Customer Deposits - Nadeem_Walayat
6.Gold and Silver Bull Phase 1 : Final Impulse Dead Ahead - Plunger
7.Central Bankers Fighting An Unprecedented Global Economic Slowdown - Gordon_T_Long
8.Putin Hacking Hillary for Trump, Russia's Manchurian Candidate? - Nadeem_Walayat
9.Stock Market Insiders Are Secretly Selling, Cycle Top Next Month - Chris_Vermeulen
10.Gold Sector - Is it time to Back up the Truck? – Mortgage the Farm? - Peter_Degraaf
Free Silver
Last 7 days
Why Putin Might Be on His Way Out - 25th Aug 16
Bond Guru Gary Shilling - The Bond Market Rally of a Lifetime - 25th Aug 16
A Zombie Financial System, Black Swans and a Gold Share Correction - 25th Aug 16
OPEC’s Output Freeze: What Has Changed Since Doha? - 25th Aug 16
Merkel Prepares For a Deliberate Crisis While White House Plans For a Disastrous Succession - 24th Aug 16
Suspicious Reversal in Gold Price - 23rd Aug 16
If Trump Can’t Pull Off a Victory, Expect a Civil War - 23rd Aug 16
Ceding ICANN and Internet Control to Globalists - 23rd Aug 16
How to Spot an Oversold Stock Market - 23rd Aug 16
Gerald Celente Sees Worst Market Crash, New Military Conflict, Gold Spike to $2,000/oz - 23rd Aug 16
EU Olympics Medals Table Propaganda Includes BrExit Britain - 22nd Aug 16
BrExit Win's Britain Olympics Success Freedom Dividend, Economy Next - 22nd Aug 16
Stock Market Top Forming, but Slowly - 22nd Aug 16
(Really) Alternative Banking Systems - 22nd Aug 16
Vauxhall Zafira Fires - Second Recall Issued - Inspection Before Bursting into Flames? - 21st Aug 16
Will the Stock Market Bubble Pop Regardless if the FED Never Raises Rates? - 21st Aug 16
US Government Spending - 3 Big Stories Not Being Covered – Part III - 21st Aug 16
Silver Analysis - 20th Aug 16
SPX New Highs, Correction Next? - 20th Aug 16
Housing Bubble - The Marginal Buyer Holds The Pin That Pops Every Asset Bubble - 20th Aug 16
Gold Miners Q2 2016 Fundamentals - 19th Aug 16
Which Price Ratio Matters Most in a Fiat Ponzi? - 19th Aug 16
Big Policies, Bigger Failures - 19th Aug 16
Higher Crude Oil’s Prices and USD/CAD - 19th Aug 16
Here’s Why You Should Look for Dividend Stocks and How - 19th Aug 16
Deglobalization Already Underway — 4 Technologies That Will Speed It Up - 19th Aug 16
These 6 Charts Show Why the Average American Is Fed Up - 18th Aug 16
SPX Easing Lower - 18th Aug 16
Low / Negative Interst Rate’s Legacy - 18th Aug 16
The 45th Anniversary of The Most Destructive Event In Modern Monetary History - 18th Aug 16
USDU - An Important Perspective on the US Dollar - 17th Aug 16
SPX Completes Wave 1 Decline - 17th Aug 16
How to Quickly Spot Common Fibonacci Ratios on a Chart - 17th Aug 16
When Does a Forecast Become a Trade? - 17th Aug 16
Kondratiev Wave - The Financial Winter Is Nearing! - 17th Aug 16
Learn "The 4 Best Elliott Waves to Trade -- and How to Trade Them" - 16th Aug 16
Stock Market Bears Turning Bullish At New All Time Highs - Time to Get Worried? - 15th Aug 16
Job Seekers Sacrificed to the Inflation Gods - 15th Aug 16
A Look At Commodities and Financial Markets Trading Week Ahead - 15th Aug 16
Stock Market New Top Forming? - 15th Aug 16

Free Instant Analysis

Free Instant Technical Analysis


Market Oracle FREE Newsletter

How to Trade Elliott Waves

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

© 2005-2016 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