The new big fear is that this month, either or both, Moody’s and S&P, will downgrade Italian debt two notches into junk territory. The potential implications of such a move, not only for Italy but for the European project as a whole, are so huge that many market players are discounting it as a possibility altogether.
“A downgrade to junk could trigger a full-blown (euro zone) crisis,” said Nicola Mai, a portfolio manager at PIMCO, the world’s largest bond investor. “…Which is why I don’t believe the agencies will do it, I don’t think they will want to be the ones causing a crisis in Europe.”
Iain Stealey, a fixed income portfolio manager at JP Morgan Asset Management, concurs. “It would be a very, very big decision, just given the size of the Italian bond market; it makes up something like a fifth of government bonds in the euro zone,” he said. In other words, contagion would spread across the Euro Zone like wildfire....Raging Bull-Shit
Italy’s Debt Crisis Thickens
Don Quijones
“Moody’s and S&P, may downgrade Italian debt two notches into junk territory.”
ReplyDeleteAh yes. Moody’s and S&P, the same ultra-corrupt ratings agencies (along with Fitch) that helped cause the 2008 crash by accepting bribes to rate worthless CDOs as “AAA” so the banks could continue their frauds.
Investment banks and securities issuers want to sell their worthless trash to investors. So they pay ratings agencies to arbitrarily upgrade the worthless trash. They pay ratings agencies to lie. Ratings agencies fraud is a central component of bank fraud.
Various parties also pay ratings agencies to unjustly downgrade the securities of competitors, or of governments like Italy’s.
If a euro-zone nation has a trade deficit, then the nation has more euros flowing out of the nation than into it. The result is ever-increasing austerity, privatization, debt, and poverty for the masses.
Italy, however, has had a trade surplus for the last five years, and it is continually growing larger. Each month, Italy sets a new record in the amount of euros flowing into Italy from abroad.
Armed with this strength, the new Italian government refuses to grovel to the Troika. The Italian government wants to spend more money on public works, rather than impose neoliberalism on the masses.
Therefore the Troika is threatening to use the corrupt ratings agencies to attack the new Italian government. The Troika wants the ratings agencies to downgrade Italian sovereign bonds, so that the Italian government must pay a much higher rate of interest for any foreign currency that the Italian government borrows. And the Italian government must pay out more interest in the bonds that it sells.
“The new big fear is that this month, either Moody’s or S&P or both, will downgrade Italian debt two notches into junk territory.”
Translation: The Troika is warning the Italian government to submit to us, or we will attack you financially.
But if the Troika follows through with its threat, the attack will be so blatantly unjustified that the nineteen governments of the euro-zone will no longer be able to conceal the fraud behind the euro-scam. The entire euro scam may unravel.
The Troika has already been attacking the Italian government for five years. This is one reason why the Italian masses elected a new government that would cease groveling to the Troika.
I REPEAT that Italy has a trade surplus for the last five years, and it is continually growing larger.
Therefore if Italy stands its ground, I guarantee that the Troika will back down. The Troika will have no choice if it wants to continue with its euro scam.
The big question is how much integrity the Italian politicians have. Will they stand their ground? Or will they accept Troika bribes to sell out their nation? [Greek politicians took the bribes and sold out Greece.]
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