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Thread: Moody's gets caught up in an Irish stew!

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    Politics.ie Member Shqiptar's Avatar
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    Default Moody's gets caught up in an Irish stew!

    The credit rating agencies - remember them? Once upon a time, their word was Gospel. But, in time, it turned out that their word was made up of some triple-A rated but toxic portfolios and then we hated them. We hated them even more as they downgraded much of Europe's sovereign debt as the eurozone crisis deepened. Here in Ireland, Moody's came in for particular ire as it downgraded Irish sovereign debt to junk status.

    To some extent, the precipitate actions of the ratings agencies (where those actions were precipitate) was driven by a need to seize the initiative from the markets. They had lost credibility by rating as AAA all sorts of toxic and subprime loans. Credit rating agencies need to be ahead of the curve. Their job is to tell the markets how it is, not the other way around.

    Well, in the case of Moody's and its view of Ireland, they've been badly wrong-footed over the last few months. Clearly, they didn't expect the country to regain market access so quickly and now they find themselves in the laughable situation where they still rate Irish sovereign debt as below investment grade while for several months now, investors have been piling in to over-subscribed Irish auctions. They're being roundly ignored.

    Today's Cantillon column in the Irish Times (it's not online for some reason ) makes the point that while Moody's "may evaluate its position [on Ireland] any day now", it does have a difficulty in "how to extract itself without looking as if it is just following the market".

    An upgrade from Moody's would mean yet more investors for Irish bonds since the mandate of many funds precludes them from holding bonds rated as junk by one of the big three credit rating agencies. So, until Moody's unhoist themselves from their own petard, we'll have to wait.... and suppress the urge to smile.

    Moody's wrong to have a negative view on Ireland - Irish Independent
    Eagla agus eaglais: an bhfuil an fhréamh teangeolaíochta céanna acu?

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    Politics.ie Member Dublin 4's Avatar
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    That muted Irish Bank recap is an issue...

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    Politics.ie Member Shqiptar's Avatar
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    Quote Originally Posted by Dublin 4 View Post
    That muted Irish Bank recap is an issue...
    You know, I was thinking about you as I was hitting [Submit]. petunia

    Give the Moodsters a buzz. They'll need a few pointers to explain themselves.
    Eagla agus eaglais: an bhfuil an fhréamh teangeolaíochta céanna acu?

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    Politics.ie Member sport02's Avatar
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    Quote Originally Posted by Dublin 4 View Post
    That muted Irish Bank recap is an issue...
    Is Moodys listening to Peter Mathews or should they take into account the latest stress tests. Noonan says we have the best capitalised banks in europe.
    Peter is at the other end of the scale with 60 billion more Irish recaps needed.

    @Shqiptar, Moodys yesterday put out a note that Irish bond sale was credit possitive, they could go further though.

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    Politics.ie Member Dublin 4's Avatar
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    As linked yesterday the Mortgage Maelstrom is hitting Balance Sheets very hard now.

    Matthews was vindicated somewhat as the consensus was that some type of recap will be need now.

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    Politics.ie Member ManOfReason's Avatar
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    Moodys don't know what the are doing. The markets don't know what they are doing either. One is just covering its ass, the other just gambling. They are all idiots - that is why we got into this mess in the first place.
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    Politics.ie Member seabhcan's Avatar
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    The fact that many funds, by law, must blindly follow the whim of the rating agencies is a huge problem.

    When the rating agencies handed out AAA rating to any old sludge, the funds poured in the money without thinking. When the ratings were withdrawn, those funds had to pull their money out enmass, which was a huge factor in the crisis.

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    Politics.ie Member firefly123's Avatar
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    It's all a load of cock really isn't it. The whole thing is just lads guessing.
    Life is hard
    That's why no-one survives

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    Politics.ie Member seabhcan's Avatar
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    Quote Originally Posted by ManOfReason View Post
    Moodys don't know what the are doing. The markets don't know what they are doing either. One is just covering its ass, the other just gambling. They are all idiots - that is why we got into this mess in the first place.
    Decades ago, then this system was built, the average hold on an investment was 4 years. Now the average is 22 seconds. No one can know whats going on when things are moving that fast. They need to slow it all down to the pace of the real economy.

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    Politics.ie Member gerhard dengler's Avatar
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    Quote Originally Posted by seabhcan View Post
    Decades ago, then this system was built, the average hold on an investment was 4 years. Now the average is 22 seconds. No one can know whats going on when things are moving that fast. They need to slow it all down to the pace of the real economy.
    This.

    Also one would assume that with more access to information, and with access to that same information being faster, that more certainty would derive in terms of investing.
    Instead the exact opposite is the case.
    Politics.ie moderators should moderate instead.
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