Make no mistake, when it comes to the major U.S. and European banks and countries the ratings agencies, S&P, Moody’s (NYSE:MCO) and Fitch, exist to promote the credit worthiness of those countries and banks, not set the market for their debt. In other words, ratings downgrades are lagging indicators of the credit situation for Spanish debt, not a leading indicator. Moody’s dropped Spain’s (AMEX:EWP) credit rating 3 notches on Wednesday in order to protect Moody’s image of a responsible market actor as opposed to warning investors about the dire degradation of the quality of Spain’s government bonds.
Any idiot can look at Spain’s situation add a few numbers together and come to the same conclusion that Moody’s just did; only a congenital moron would buy Spanish debt right now, or someone with a gun to their head….or Mario Draghi. But, I repeat myself.
Spain’s credit rating was cut 3 notches, but 6 or 7 would have been more appropriate, from A3 to Baa3, which to my way of thinking has an extra ‘a’ in it while missing a ‘d.’
With the bailout that wasn’t now on hold because Germany has not gotten a pledge of Spain’s 2400+ tons of gold as collateral for a bailout of the political class that has destroyed an entire generation of Spaniards we are rapidly approaching the moment when a bunch of very angry Greeks could vote in ultra-nationalist Fascists, exit the Euro and tell Germany, “thanks for all the free money these past 15 years. Now we’re even for WWII. Antio!”
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