“I myself never saw a Triple-A fund as that important”
via The Slog.
Just incase you where in any doubt how monumentally blind and stupid Angela Merkel appears to be, below is a short excerpt of S&Ps’ reasoning for the downgrading of EU countries. Taking particular attention to note the lack of any kind of confidence in the EU to get anything done.
More fundamentally, we believe that the proposed measures do not directly address the core underlying factors that have contributed to the market stress. It is our view that the currently experienced financial stress does not in the first instance result from fiscal mismanagement. This to us is supported by the examples of Spain and Ireland, which ran an average fiscal deficit of 0.4% of GDP and a surplus of 1.6% of GDP, respectively, during the period 1999-2007 (versus a deficit of 2.3% of GDP in the case of Germany), while reducing significantly their public debt ratio during that period. The policies and rules agreed at the summit would not have indicated that the boom-time developments in those countries contained the seeds of the current market turmoil.
Bond Holders walk away from Greece Bond Haircut:
This week also hailed the final nail in the coffin for the Greek haircut idea, with the IIF walking away from talks to “pause for reflection” link Interesting to note that media reported this as a done deal back in November.
It was never going to happen, why would the major bond holders voluntarily take cuts on their holdings. Bare in mind that the vast majority of holders of Greek debt now appear to be Hedge Funds.
These Hedge Fund being neither stupid nor suicidal knew that the EU was unlikely to force any cut, and were more likely to pay them out. Secondly, you really think they didn’t by insurance just incase? So why would you take a cut, when both options available to you are up.
Bloomberg: US Banks heavily exposed to CDS on EU Debt.