Spain’s Debt Rating Cut as Finance Officials Meet → dealbook.blogs.nytimes.com/2010/ … ials-meet/
Pick the next letter in this sequence:
G… P… S…
What would the practical implications of Ireland’s rating being cut? More costly borrowing?
What are we at the moment? AA- ?
I think there will be a dump if we go below AA, from what I’ve seen a fair number of pension funds only hold AAA and AA rated debt?
If so, it will look like a spike in our borrowing costs as there will be forced sales. If they do it, it would be better for us that they do it sooner rather than closer to the next bond issuance as that would give a chance for excess supply to be soaked up (nobody is going to pay x% when there is x+y% available in the secondary market - I think!).
I would see it as a threat to the Croke Park agreement. Like it or love it, it would be good for government borrowing if there was social cohesion in the public service. A rise in borrowing costs could spell trouble for the fiscal proposals and might lead to a government renegotiation of the deal. Any trouble in this area would be further preyed on by the financial markets.
I’m going out on a limb here, and guessing Spain has a pretty big Gold reserve built up over centuries, as well as investing in several major oil reserves in Latin america via Repsol etc.
We on the other hand have a huge property portfolio stretching from Dublin to Kiltimagh.
I think we trump Spain.
Why do the likes of S&P carry such credibility?
They operate in a cartel with two other rating agencies. There seems to be significant barriers to entry.
They foresee fuck all as evidenced by Enron, US subprime, and the multinational banking crisis
What’s on the fucked list now…Japan, Greece, UK, Spain, Portugal, Ireland, maybe Italy. By implication 350million wealthy consumers in the EU. I think life will go on.
It’s all relative. If everyone is fucked then it’s ctrl-alt-delete, start again. Except they still lack credibility.
They did, until about 1937 when it was moved to Moscow for “safe-keeping” in return for a few obsolete tanks and planes.
What about mass unemployment? 40 % of Spanish men under 30 on the scratcher. I doubt they are feeling very wealthy at the moment.
Spain has 280 tonne of Gold, which is better than Ireland’s reserve of 5.5 tonne. Wiki-link