Best of the Week
Most Popular
1.How U.S. Dollar Destruction Threatens the Global Economy - Steve Forbes
2.Why UK House Prices Will Continue Rising - 'It's Immigration Stupid' - Nadeem_Walayat
3. Bitcoin Price at Beginning of a Move up? - Mike_McAra
4.Gold Price to Plunge, Visiting Fort Knox - David_Hague
5.Silver Price Forecast - Metal to Gain Ground in August on These Factors - Jim Bach
6.Gold And Silver Will Rise With US Dollar Demise, Just Not Soon - Michael_Noonan
7.Bitcoin Price Strong Move Possible - Mike_McAra
8.Israel Gaza War Crimes - Soldier's Ordered to Shoot Civilians Including Children - C4News - C4News
9.UK House Prices Crash Warning - Daily Mail Cognitive Dissonance - Nadeem_Walayat
10.UK House Prices Boom - Top Quick Cheap Tips to Help Sell Your Home - Nadeem_Walayat
Last 5 days
Gold Rising Interest Rate Fallacy - 22nd Aug 14
Jackson Hole: Myth of the All Powerful Central Banker Continues - 22nd Aug 14
Partying On In The Terror State - Thank God for Nuclear Weapons - 22nd Aug 14
The Something for Nothing Society - Lifecycle of Bureaucracy - 22nd Aug 14
Hitting The ISIS Panic Button In The Middle East - 22nd Aug 14
US Stock Indices 10-Year Consolidation Patterns ... Upside Breakouts? - 22nd Aug 14
Gold and Silver Price Getting Set To Explode Higher - 22nd Aug 14
Deflation's Final Curtain Call - Part II - 22nd Aug 14 - Clif_Droke
Gold Big Picture: Most Important - 22nd Aug 14
How the “Uncertainty Factor” Drives Crude Oil Prices - 22nd Aug 14
Inflation, Interest Rates, and Why You Should Own Gold - 22nd Aug 14
U.S. Interest Rates Can Rise States Fed President - 22nd Aug 14
Why Emotional Discipline is Key to Trading Success - 21st Aug 14
Getting the Most Value from Your “Geriatric Cruiser” - 21st Aug 14
Mafia Boss Claims Stocks A Bubble, Buy Physical Gold and Silver - 21st Aug 14
Outrage! On The Beheading of Our Media Brother James Foley - 21st Aug 14
Stock Market Crash a Historical Pattern? - 21st Aug 14
The Black Box Economy - 21st Aug 14
The Bond Market is taking Advantage of Janet Yellen`s Dovishness - 21st Aug 14
Meet Your Investment Manager - 21st Aug 14
Gold and Silver Trading Alert as U.S. Dollar Soars to New Highs - 21st Aug 14
President Obama Strongest Statement Yet on Israel Gaza War - 20th Aug 14
Peak Gold? Russia To Surpass Australia As World No 2 Gold Producer - 20th Aug 14
AI, Robotics, and the Future of Jobs - 20th Aug 14
Stock Market Investors What's Your Exit? - 20th Aug 14
The Gold War - Thinker, Trader, Holder, Why? - 20th Aug 14
Ukraine Interest Rates Soars to 17.5% As External Debt Cannot be Repaid - 20th Aug 14
Rising Interest Rates and The End of Stimuland - 20th Aug 14
Inflation Watch: $245,000 to Raise a Child in United States - 20th Aug 14
Inside the Stunning Deal That Put Apple and IBM on the Same Side - 20th Aug 14
The US Gold in Fort Knox is Secure, Gone, or Irrelevant? - 19th Aug 14
Bitcoin Price On The Brink of a Possible Reversal - 19th Aug 14
Why Tesla Stock Price Will Double in the Next 12 Months - 19th Aug 14
Europe's Economic Malaise: The New Normal? - 19th Aug 14
The Coming U.S. Economic Collapse Will Trigger a Revolution - 19th Aug 14
Market Bubbles, Bubbles Everywhere - 19th Aug 14
This is Your Economic Recovery With and Without Drugs - 19th Aug 14
Stock Market Strong Start to Jackson Hole Week - 19th Aug 14
Iraq, Ukraine - Oh, What A Tangled Mess We Weave - 19th Aug 14
How to Apply Moving Averages as a Trading Tool - Video - 18th Aug 14
Why Short Stock Traders Are Losing Money This Week - 18th Aug 14
Stock Market Rally May be Complete - 18th Aug 14
Why Chinese Citizens Invest In Gold - 18th Aug 14
Palladium Reaches 13-Year High Over $900 oz as Gold Trading Volumes Surge 66% - 18th Aug 14
Understand and Profit from Surging European Volatility - 18th Aug 14
No Escape from The Dollar as The Currency Standard - 18th Aug 14
Stock Market New Highs Less Certain - 18th Aug 14
German Stock Market DAX About To Drop - 18th Aug 14
Stay on Board - Stock Market Big Picture - 18th Aug 14
Europe Economy Is Tanking, QE Is Coming - 18th Aug 14
Are You Ready for The Greatest Technology Revolution Yet? - 17th Aug 14
Why King Coal is Bigger than Oil or Gas - 17th Aug 14
U.S. Empire of Death and Lies - 17th Aug 14
Ukraine - Whose Spin Are We Caught Up In Here? - 17th Aug 14
Time Decay And No Escape For Abenomics - 17th Aug 14
India BSE SENSEX The Party Is Over In Bombay - 17th Aug 14
Stock Market Uptrend Looks Underway - 17th Aug 14
The Key Role Of Conspiracy Theory In Dumbing Down Society - 17th Aug 14
The Federal Reserve in Denial Mode - Bond Market Explained - 17th Aug 14

Free Instant Analysis

Free Instant Technical Analysis


Market Oracle FREE Newsletter

The Biggest lie in Stock Market History Revealed

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

© 2005-2014 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

Free Report - Financial Markets 2014