Over the past few years we've seen numerous examples of S&P stupidity, from the toxic assets rated AAA (although that might have just plain, fraud not stupidity) to the downgrade of the US credit rating even though there is ZERO risk of a US default because it's a currency issuer, to this...a statement by S&P on Europe's EFSF fund:
| ""In our opinion, there is an "almost certain" likelihood that the EFSF's 'AAA' rated member governments would provide timely and sufficient extraordinary support to the EFSF if needed." |
And who might that support come from? France? Germany? Those nations are all credit sensitive themselves and are, therefore, constrained due to the fact that none of them are currency issuers.
By establishing the EFSF as the mechanism by which the situation gets "resolved" and precluding ECB support, they have all gone into "Ponzi," a fact you'd think S&P would recognize. But then again, S&P doesn't think it just issues proclamations based on ignorance.
13 comments:
why is it ponzi?
Borrow from someone to pay someone else. Keeps going until all funds are exhausted and/or no more lenders can be found. German, EU, funds are limited. Only ECB can keep them out of ponzi.
Wow S&P is beyond insane. US doesn't get AAA, but a conglomeration of infighting, incompetent Europeans with shaky credit does. I don't see how on earth they can justify AAA for the EFSF.
oh yeah right. duh! thanks Mike.
agreed Ben. I fade all things that come out of S&P. LOL :D
S & P is purely venal and nuts to boot! What do you think Moody's will do, Mike. Think they'll recognize the difference between a currency issuer and currency users? -:) -:) -:)
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http://www.youtube.com/watch?v=Y2eX0dtzeH4
http://www.youtube.com/watch?v=W_FnfH8-wqI
well at least he's down there talking to people. I respect that.
But once again it all really comes down to MMT principles again and how taxation and expenditure really work. Until we all get those concepts, it's just drunken people blabbering off at each other.
His FDIC bailout argument is flawed b/c there was not bailout policy in place before the huge 2008 bailouts happened. The banks went for the bailouts with or without government policy and they behaved recklessly without government policy. The man has no point. He acts like a bludgeon in a debate. LOL
Earlier I was reading about Hyman Minsky and wondering if Europe was in Ponzi financing. Thanks for answering my question.
With Norman's various list of MMT invariants ( aka Mike's Toolkit), it was easy to see how the currency, the banks, the markets, and the EU itself was all rigged over the past years.
That gets back to how things should have been - like fading the Euro but what really happened - rigging.
Europe Seeks Investment From China in Euro Rescue
on the front page of NY Times.
is this part of the Ponzi ?
If Europe lets Greece temporarily default and restart the old Drachma, then it would protect EU from China.
Default is bug spray to Chinese mosquitos.
I assume.
Now the Chinese want to buy into Europe which is wholly crass.
The guy is insufferable.
As you suggest it may be the case that S&P are not being stupid...
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