In their quest to restore financial stability in the face of declining confidence in European institutions, the Eurocrats have decided to crack down on the bearers of bad news.
The European Commission recently proposed new regulations to compel credit rating agencies to disclose their methodology and assume responsibility for any losses their ratings might cause.
The European Commission proposed new rules Tuesday to force credit rating agencies to disclose the methodologies and data they use to rate sovereign debt.
AdvertisementThe new proposal could subject Standard & Poor’s, Moody’s Investors Service and Fitch Ratings to European pressure, in turn suppressing information that might hurt the trading of sovereign debt.
The proposal would also let investors sue the ratings agencies for civil damages if they believe the ratings were “intentionally or grossly negligent.”
And the draft proposes to force the rating agencies to publish their ratings “after the close of business and at least one hour before the opening of trading venues in the EU,” the EU’s top market regulator said in a statement.
The New York Times reports that some of the Commission’s members pushed back partly at the urging of London. However, “the commission did agree to other measures that would increase the liability of the agencies for improper ratings, oblige issuers of debt to use a wider range of agencies and require agencies to issue ratings in a manner that was least likely to provoke volatility in the financial markets.” Other proposals included limiting changes in ratings to once in twelve months and the creation of a new European credit ratings institution.
These proposed regulations will make credit agencies think twice before expressing doubts about the solvency of a sovereign borrower.
But other countries are not so sure that shooting the messengers of doom will stop catastrophe from unfolding. Even the US is getting ready to a “worst case”. Ezra Klein at the Washington Post cites a Federal Reserve research paper which argues that a Eurozone collapse would very likely plunge the US into recession.
Meanwhile, the bigger, scarier unknown is whether financial mayhem in Europe could wreak havoc on U.S. banks. Reuters reports that the newly created Financial Stability Oversight Council is desperately trying to figure out which firms are exposed to a euro zone crisis. Indirect U.S. bank exposure to Europe could total more than $4 trillion, although it’s unclear how much of those potential losses would be limited by hedging and so forth. That $4 trillion is a worst-case scenario.
… it’s a large enough number that policymakers are racing to build up a firewall. The Federal Reserve will reportedly initiate a new round of stress tests for U.S. banks soon.
But what can be done? Even though Brad de Long says that Washington is exhorting leveraged US banks to lower their exposure to Europe it is not clear that simply shifting the risk around will help any more than re-arranging the deck chairs on the Titanic. It may reduce single points of failure, but given the size of the bomb ticking, it may not make much of a difference.
Meanwhile, we have a reminder from Hollywood that it is never good to bring bad tidings to an angry king.
Storming the Castle at Amazon Kindle for $3.99
No Way In at Amazon Kindle $3.99, print $9.99
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The EU has an excellent idea. This way Garcia will never find out a message could have saved the day. Perfect strategy. Next, cover up all the flashing lights at railroad crossings. They are merely annoying distractions to motorists.
“The European Commission recently proposed new regulations to compel credit rating agencies to disclose their methodology and assume responsibility for any losses their ratings might cause.”
The last frantic, desperate gasp of the euro elite: soon it will be illegal to notice, let alone mention what an epic failure their pseudo-socialist fantasy has bercome.
Obama is in Australia and will announce a new joint defense initiative.
US Marines will be stationed in Darwin—interesting
So what if their data is wrong? Remember the rich kid who pretends to be broke all the time. We can’t really blame him.
“This is Madness”
THIS! IS! SPARTA!!!!!!
This is great. The abject gnosticism of the Euro elect frantically waving their magic wands is being revealed for all to see the real religion of our passing age. The owl of Minerva is aloft. Check out this beautiful example of EUtocratic sophism: the author probably even begins to convince himself:
http://www.theglobeandmail.com/news/opinions/opinion/in-times-of-crisis-bring-on-the-technocrats/article2236064/
Heard this evening that Greek bonds are on the books of the European banks for about 30% more than what they’re publicly traded for. The European banks meanwhile are leveraged to about 30-50 to 1. So even if they recognize small losses — they will take enormous hits.
US banks are better capitalized as they have been recapitalizing for the last couple years. Still the size of the problem is such that even if the US banks are a anything close to the more traditional 12 to 1 ratios — a major crises will have severe effects on them.
The European response looks to be similar to what the Egyptians did a couple months back. May well mean the Euros are on a similar short fuse.
About a year and a half ago I attended a lecture by a Chinese economist who argued that its financial system was a house of cards. Now this Chinese TV host is saying the same thing. Imagine if it were true.
Well maybe it is. If the EU can go to these lengths to keep up appearances what might China do? Maybe we’re about to find out.
James Cagney starred in a movie called 13 Rue Madeleine playing an OSS officer. In the course of the film, Cagney is captured by the Gestapo and just as he is being tortured he hears the drone of a wing-sized bomber raid coming to obliterate the building he is in. As the Gestapo torturers mill around in terror, Cagney has the last laugh. Maybe if the whole shebang goes up in smoke it will be the same thing; you’ll see thousands of people who have lost everything laughing manically at the sight of the Masters of the Universe jumping from the 60th floor in Manhattan, while wide screen TVs show the Chinese Commissars and EUrocrats pursued by mobs carrying rope, tar, feathers and assorted blunt objects.
Everyone will still be ruined, except that the miserable will have lots of company.
So the EUcrats think that by muzzling the credit ratings they are going to make their bonds more attractive to the market?
On the whole the market isn’t that stupid. They’ll factor the risk as being much higher than stated, or find another way to find out what the risk is. Either way the EUnunchs aren’t going to be able to sell their phony baloney debt instruments at a quantity and price that will do them any good. They are shooting themselves in the foot while it is in their mouth.
Do I hear the bleating of a scapegoat being led on stage? The You_rows seem to be holding to tradition. After all, killing the messenger has been around for thousands of years. Mainly because it works so well. Several extinct civilizations testify to it’s efficacy. To hot in the kitchen? Smash the thermostat. That will fix things!
a Eurozone collapse would very likely plunge the US into recession
That claim drives me into a recession.
I mean, the claim that we are “not in a recession” already.
The US economy has been in a hole since 2007, but since we officially stopped digging we’re not in a recession. We’re in a HOLE, but we’re not in a recession. La-dee-dah. So if Europe craters at our feet, then we’ll be in a recession, the ten-foot hole will be at least two inches deeper. Hoo-yah.
Like the claims that if the employment report says we gained 80,000 jobs in a month, then Obambus says he’s doing great, we’re doing great. Bzzt, wrong. 80,000 jobs reported means the reports were that we LOST 40,000 jobs because the BOL *assumes* that we create 120,000 a week – and that documentation will eventually arrive – because that remains our rate of population growth.
So, our employment numbers are arcane and unbelievable anyways on a dozen different measures, and I frankly seldom believe the GDP numbers either, as I fear they include the value of goods produced in China and just relabeled here as “US production”. So even the technical claim that we are not in a recession (two consecutive quarters of digging the hole deeper) is barely credible.
I wish I could find some “legitimate” economists outlining just how Bernankecare might be a sustainable regime, as I keep speculating hereabouts. Or maybe Bernanke his own self might deign to explain himself to us … as long as Tom Cruise (as Lt. Daniel Kaffee) isn’t there to cross-examine him (“I want the TRUTH!”).
Aha, well, I see the European markets are *up* today as the ECB has found it in their heart and their ledger to somehow do The Bernank and buy Italian and Spanish bonds. As I have been predicting.
Though just how they are doing it and for how long remains to be seen, as they have been swearing on a stack of whatever has replaced the Bible in European culture that they could, should, and would not do any such thing. If it turns out they are doing it with Bernankebux then – well, I just dunno anymore.
What I find most telling is the calm arguments offered by the advocates for this idea. They are using words and assembling them into strings that obey the rules of grammar. They are going through the agreed processes of meeting and voting. And it is completely disconnected from objective reality. Even a child –maybe especially a child– knows this won’t work. Yet they persist. I think when a psychosis becomes this open and debilitating, there is no hope left. The EU has broken apart, its apparatus is disintegrating as we watch, and its credibility –which supports, and is supported by, that apparatus– is finished.
Zombie time.
Stage 1) We are sober and serious Technocrats. Trust Us.
Stage 2) Spinning Plates as the culture loses faith.
Stage 3) Men in snappy black uniforms break into homes to take children’s piggy banks and drag off Jews.
“Pres Obama, show some guts & arrest the CEO of Standard & Poor’s. These criminals brought down the economy in 2008 & now they will do it again” — Michael Moore, tweeting in his gilded cage.
“The European Commission recently proposed new regulations to compel credit rating agencies to disclose their methodology and assume responsibility for any losses their ratings might cause.”
“The ideas of a tax on mobile financial transactions that did not include America or China”
The EU recognizes no limit to its laws; no sovereignty not subject to its will; no jurisdiction beyond its reach. The EU wishes to be the taxing authority for the world.
We have an army sitting in Europe. When will we use it to crush the EU?
Burn it all down.
WaPo: The Obama administration, which gave the solar company Solyndra a half-billion-dollar loan to help create jobs, asked the company to delay announcing it would lay off workers until after the hotly contested November 2010 midterm elections that imperiled Democratic control of Congress, newly released e-mails show.
The proposal would also let investors sue the ratings agencies for civil damages if they believe the ratings were “intentionally or grossly negligent.”
Sounds sensible. So hypothetically speaking if I were to buy some AAA-rated Government of France bonds, and it turned out that France wasn’t really AAA after all and the ratings agencies failed to report this when they could and should have, I could sue the ratings agencies and perhaps recover some of my losses?
This is the sort of scenario they have in mind, right? They are trying to rein the the ratings agencies’ over-reliance on rose-tinted glasses, and have the agencies give higher quality data so that investors can allocate capital with a proper understanding of the risks?
Re: the solyndra emails.
the only thing that surprises me is anyone is surprised. I’m waiting for the documentation that shows just how much of that $500 million was roundtripped straight back to the DNC and Obama’s campaign accounts. Not to mention how much was simply funneled into the private accounts of everyone involved.
Ratings satisfy a legal prudence requirement, is all. Everybody knows the deal.
A high rating means that a conservative fund can lend to it, not that the fund cares one way or another, except that they get paid for what they invest, not what they earn, and don’t want to turn away money.
A high rating means that the lender makes more money, whether it’s justified or not.
The fund’s investors are the losers. Say pension plans.
The ratings don’t play exactly the role that appears in the usual narrative.
OK, didn’t a post or two ago discuss the discovery of understated debt in parts of Spain? And this action will help?
Being ever the optimist, I see a business opportunity here. A rating agency with no offices in EU. In the Caymans, say. Call it TIR, Truth in Rating.
Insanity is fun to watch…in a macabre sort of way.
Do the EU countries welcome the cessation of financial ratings?
“The European Commission recently proposed new regulations…”
Insert Downfall parody here. “Steiner….”
For decades, the EU has been busy trying to obliterate the notion of nations, with everyone being a member of the EU rather than a Frenchman or an Italian. To serve this end, they were busy encouraging high levels of immigration to reduce the social cohesiveness of the European nations, by inserting people who have no history with, no cultural foundation with, nor loyalty to, the country they currently reside in.
The net result will be that when Europe splits, it will not split into the original countries, but into a multitude of little enclaves. Europe, say hello to a resurgence of feudalism.
Regarding the rating agencies: one of the best things that could be done would be to require records and statistics, available on the Internet, for every bond default and what credit rating that company was assigned one year, two years, and five years before the default. Make rating companies disclose their actual track records in the form of the actual probability (from past experience) that a AAA, AA, (etc) company will default. Let people see for themselves how much credence to give any particular rating agency’s pronouncements.
Confronted with this situation the resonable investor would decide that the rating agency is now a propaganda arm of the sovereign issuer and assume that the bond deserves junk status. If those goofy Eurps pull this off they will see foreign investment evaporate in the blink of an eye. They will have to pass new laws banning their citizens from investing outside the EUzone to keep the money from fleeing.
It will mean the collapse of the New World Order/Globalization dream as trade will drop like a stone when the rest of the world stops taking Euros (backed by the full faith and fairy dust of the EU). The funny part is that, given this scenario, the Italians are in relatively better shape than most of the rest of the EU as they have significant gold holdings (2451 tonnes) and could re-issue the lira with a gold backing and then they would in a position to turn the tables on their northern neighbors.
That would be a hoot!
Muzzling the ratings agencies is an act of madness driven by rank paranoia. Maybe they can ask the US congress to keep an eye on George Soros while their at it and not engage in inside trading information should the money market offer some opportunity to profit. Great changes bring great opportunities to profit even if it is based on the collapse of nations.
From a post on Zerohedge.
“Think about what you just asked me.”
“How messed up is Europe? They have a German Pope and a Italian Central Banker”
“They have what we call in Texas a Mexican Standoff”
From Wikipedia:
“In financial circles the Mexican Standoff is typically used to connote a situation where one side wants something, like a concession of some sort, and is offering nothing of value, and the other side sees no value in agreeing to any changes so refuses to negotiate. Although both sides can benefit from the change, neither side can agree to a compensation value for agreeing to the change and nothing is accomplished.”
http://news.bbc.co.uk/2/hi/programmes/hardtalk/9639507.stm
anton – “the Italians are in relatively better shape than most of the rest of the EU”
Especially true if there is some conflagration in Iran. Iran will bottle up gulf oil exports and the EU will need to get its oil supply from??? Italy I suppose. Maybe that explains the Libyan adventure, over reliance on gulf oil.
Wretchard: is this the post you are referring to:?
“Larry Lang, chair professor of Finance at the Chinese University of Hong Kong, said in a lecture that he didn’t think was being recorded that the Chinese regime is in a serious economic crisis—on the brink of bankruptcy. In his memorable formulation: every province in China is Greece.”
http://www.theepochtimes.com/n2/china-news/chinese-tv-host-says-regime-nearly-bankrupt-141214.html
“Every province is Greece”. Hmmm. This Larry Lang has really got some cajones. I’m a thinkin he might get some visitors from the Chinese Guvmint to re-edumacate him like back in the day. Best of luck to him.
unsk – “I’m a thinkin he might get some visitors from the Chinese Guvmint to re-edumacate him like back in the day”
No kidding. If effete Euro-fascists can threaten rating agencies what do you think the PLA is capable of when it comes to protecting the perceived value of their currency? House of Cards? House of mirrors.
soon it will be illegal to notice, let alone mention what an epic failure their pseudo-socialist fantasy has bercome.
That’s just political correctitude writ large. There have been so many things that we’re not allowed to notice, in government employment and on college campuses, that our betters now believe this is the real world and we’d better resign ourselves to it.
ErisGuy,
You do know that the United States is, by far, the most aggressive about passing laws that apply outside of its borders, right? No country on the planet taxes the income of its citizens when they live outside that country…except the United States. The United States pioneered the the practice of criminalizing the conduct that is taken outside the United States (See, for example, the FCPA). The United States has been extremely aggressive about requiring overseas banks and financial institutions to report all manner of financial information about US citizens that is taken overseas. So much so, that foreign banks are now starting to refuse to allow US citizens to open accounts with their banks.
The EU is just copying the US.
12. oMan
What I find most telling is the calm arguments offered by the advocates for this idea. They are using words and assembling them into strings that obey the rules of grammar. They are going through the agreed processes of meeting and voting. And it is completely disconnected from objective reality. Even a child –maybe especially a child– knows this won’t work. Yet they persist. I think when a psychosis becomes this open and debilitating, there is no hope left. The EU has broken apart, its apparatus is disintegrating as we watch, and its credibility –which supports, and is supported by, that apparatus– is finished.
Zombie time.
………………..
The Japanese went into a malaise after their real estate/banking crises of 1991. Their efforts resulted in zombie banks. Presumably this meant that the banks carried a whole lot of debt on their books that was unrecognized. But they have been able to do this for decades. While the country limps along with limited growth. One presumes that eventually the banks there will work off their debts.
The question is can Europe do the same thing. Will there be a financial firestorm over Europe — or will they simply limp along for a decade or two while their banks work off their debts.
The Europeans are well versed in this. I can tie this behavior to the present crisis in Greece. Back in the not too distant past when countless billions were flowing into Greek infrastructure projects the European agencies responsible for dispersing the funds needed to show that the funds were properly accounted for. It was, of course, not to the advantage of the funders nor the recipients to have accountability as a large percentage of the funds were being siphoned off for other uses. To get around the delicate problem of accountability, an ingenious plan was developed. The Europeans would allow the Greek recipients to draft the terms of the supervision contracts. The Supervisors of the contracts would be graded on the performance of the projects. The Supervisors would be scored from 1 to 100 on several categories of performance such as adherence to schedule, cost over runs, quality and so on. The Greek recipients of the funding would actually score the performance of the Supervisors responsible for financial oversight. If I remember correctly, from 90-100 everything ok, 80-90 Supervisor gives up 10% of their billing. Less than 80% score – Supervisor removed from project. These terms were actually written into the Supervision contracts and approved by the European lending agencies. Everyone associated with these projects in Greece knew what was going on but were powerless to blow the whistle. Would you want to be the Manager responsible for a 79% score and loss of the Contract?
Multiply this by a thousand fold and you can understand the meltdown occurring today.
ch @ 31: You do know that the United States is, by far, the most aggressive about passing laws that apply outside of its borders, right?
wrong. remember the “universal jurisdiction” laws in Europe that allow the county sheriff in some Spanish cow town to declare Henry Kissinger or Dick Cheney a world criminal for deeds done in some third country jurisdictions such that said sheriff can bind Interpol and all EU governments to threaten to arrest Kissinger if he lands anywhere in Europe.
remember EU suits against Microsoft practices worldwide and/or in cyberspace as offending their tender sensibilities.
remember the existence of the International Criminal Court and others in Brussels where academics in comic opera gowns pretend to rule the universe from the throne of civilization.
remember that any Islamic mullah can put out a fatwah on anyone anywhere on the planet if in his individual opinion someone has violated the Koran, for example by ignoring it?
though your point is right, that the US does have equally comic regulations about the behavior of US citizens while they are overseas, though I suppose there are *some* arguments in favor of such things. anyway, there is madness enough to go around.
18. wws
Solargate has blown wide open. FOX claims Congress has an audit trail leading right back to the Deputy Chief of Staff at the White House. Now Congress has a legal reason to get ALL the WH records. Lots of snakes in that woodpile, son.
The question now is will the Democrats vote to impeach or fall on their swords?
This is simply further evidence that the current situation is “unsustainable” — to borrow one of the PC crowd’s favorite words. Something is going to crack. Design margin all gone.
What triggers the inevitable avalanche is likely to come out of left field. Venezuela descends into civil war. Scotland issues a Unilateral Declaration of Independence. A strange new virus comes out of the hooches of Laos. The final straw is likely to be something that none of us has foreseen. But when the entire structure is rotting, any good push can bring it down.
The EU sovereign debt nonsense will wash across the Atlantic and hurt the U.S. to some unknown degree. But the EU is more than just a financial funny farm.
According to Wikipedia:
As a single economy, the EU is the largest trading partner of the US with $319.6 billion worth of EU goods going to the US and $239.8 billion of US goods going to the EU as of 2010, totaling approximately $559.4 billion in total trade.
If the EU disintegrates, trade with the EU will shrink. That will have a big effect on the U.S. economy (and some smaller effect on the Canadian economy). By comparison according to wikipedia, total U.S trade with Canada in 2010 was about $525 billion.
36. Kinuachdrach
Design margin all gone.
……
You restore the design margin by getting everyone energy independent–starting with the USA. But this will take 10 years. Maybe less for the USA.
c @ 38: You restore the design margin by getting everyone energy independent–starting with the USA.
And you get the US energy independent by sending Obambus back where he came from.
And you send Obambus back where he came from by coming up with a strong opposition candidate.
http://www.businessweek.com/news/2011-11-16/wells-fargo-survey-says-80-may-be-the-new-65-for-retirement-age.html
Wells Fargo Survey Says 80 May Be the New 65 for Retirement Age
November 16, 2011, 11:24 AM EST
By Elizabeth Ody
Nov. 16 (Bloomberg) — Americans are prepared to work longer in order to save enough for retirement, according to a survey by Wells Fargo & Co.
About 76 percent of respondents said it’s more important to reach a specific dollar amount before retiring, compared with 20 percent who said it’s more important to retire at a given age, regardless of savings, according to the survey of adults with household incomes or assets from about $25,000 to $100,000.
“Eighty is the new 65,” Joseph Ready, executive vice president of Wells Fargo Institutional Retirement & Trust, said in an interview at Bloomberg headquarters in New York before the survey was released today. “It’s a real sea change.”
About 74 percent expect to work in retirement, according to the survey, with about 39 percent working because they’ll need to and 35 percent because they want to. And 25 percent of those surveyed said they expect they’ll need to work until at least age 80 because they don’t have sufficient savings.
“People are starting to move toward understanding the different levers of what they’re going to have to do to make it in retirement,” Ready said.
About 68 percent of those surveyed said they’re not confident the stock market is a good place to invest their retirement savings. About 45 percent of respondents said if they were given $5,000 they would buy a certificate of deposit, and 50 percent said they’d invest it in stocks or mutual funds.
No Good Alternative
“Even though there’s a lack of confidence, I don’t know that they see there’s a good alternative,” to investing in stocks, said Laurie Nordquist, executive vice president of Wells Fargo Institutional Retirement & Trust.
The Standard & Poor’s 500 Index returned 1.32 percent this year through Nov. 14. One-year CDs yielded 0.35 percent and five-year CDs paid 1.19 percent on average as of Nov. 3, according to Bankrate.com, an online provider of consumer-rate information and a unit of Bankrate Inc.
Survey respondents had saved a median of $25,000 towards retirement and estimated they’d need a median of $350,000 to support themselves in retirement. About 42 percent expect to receive a pension or already receive one.
“The numbers don’t add up,” Nordquist said. “The gap is probably larger than what they self identified.”
Those surveyed expect to withdraw about 18 percent on average from their savings each year in retirement.
“We would recommend typically 4 percent or less, in terms of withdrawals,” Nordquist said.
About 57 percent of respondents said they’re confident they’ll have saved enough for retirement.
…
–
Take that, Greece.
The *problem* being, of course, what sort of jobs might be available, with a lot of those for average citizens over 65 being towards the minimum wage side of things, or even less with home-based businesses.
So in a nutshell, the European Commission has found a way to tax bad news. This is quite clever in a stupid sort of way.
Thankfully, my bank reports they are pretty well insulated against the Eurozone problems, being primarily a US investor. It’ll pinch, but we’ll not lose an arm or a leg.
The French and rest of the EU almost peed themselves in joy when they US was downgraded, now they are trying every fiat of government to prevent it happening to them. The rating agencies should tell them to go to hell, and refuse to pay any court judgements against them in such cases.
Let the EU fail. It is what we should have done viz Merrill Lynch, GM, et al here in the US, let them reorganize under bankruptcy and throw their executives into gaol where they can worry about being gang-raped in the showers on a daily basis.
One possible response from the ratings agencies: simply say “We have no comment about the solvency of Italy or Greece”, and let investors draw their own conclusions.
If I were a Credit Rating agency, I’d list all of the Europeans sovereign debit as “unrated” and explain exactly why.
Just as software reviewers should explicitly not review software whose publishers end-use licenses try to squelch negative reviews.
If you can’t give an honest assessment, give no assessment at all, and say why. Anything else is dishonest.
A CONSERVATIVE PEER and the chief executive of the retail chain Next wants to give you a €300,000 ($400,000) prize. And there’s an apparently simple way to win it: can you figure out how best to let a country leave the euro?
Read more: http://businessetc.thejournal.ie/next-ceo-offers-e300000-if-you-figure-out-how-to-leave-the-euro-280771-Nov2011/#ixzz1dtOYLkf8
“Obama is in Australia and will announce a new joint defense initiative.
US Marines will be stationed in Darwin—interesting”
I saw the press conference in the middle of the night and immediately thought of Wretchard. I figured he’d have something to say about this intriguing development. The exercises are taking place in Northern Australia, too. It’s obviously a message to China. Something’s bubbling up the chain of command that’s got someone worried.
This EU moment highlights the wisdom of removing the US Government’s imprimatur from the ratings agencies. The raters should not be accredited/approved/etc. by the USG, and should be treated as any other free-market financial institution (e.g. not be given the semi-monopoly/-cartel status they have been enjoying.)
Then the world (including EU folk) can assess risk based on the reasoning and track records of the raters, leaving the raters’ only responsibility being that of being honest rather than omniscient.
Dack Thrombosis @ said:
“US Marines will be stationed in Darwin—interesting …. Something’s bubbling up the chain of command that’s got someone worried.”
Drudge says the USMC force will eventually ramp up to 2,500 GIs. Typically, Darwin is the city attacked when a foreign power wants to play with Australia (the Japanese flattened Darwin in WW-II). These Marines are being setup as a “tripwire”.
Okay, who wants to play with Australia? First obvious answer is China. However it makes no sense to attack Australia directly through Darwin if you can chose any location on the continent. China would most likely launch a war for resources and seize Port Headland for the iron ore or maybe Weipa for the bauxite. Another possibility is that China plans on forming an alliance with Indonesia.
Somebody anticipates that China is planning something against Australia. Setting those Marines up as a tripwire is a statement that we’re on to them. After the world economy collapses there will probably be wars to seize natural resources in MENA, Africa and Australia. This maybe an opening gambit.
It would not surprise me if the US draws down forces in Europe and shifts them to Africa and the Persian Gulf. Where’s the logical place to set a tripwire in Africa?
On the main topic, the attempt to co-opt the rating agencies; in a rational world some things would happen.
1) rationally, the ratings agencies would withdraw from rating any European public or private issuance of debt. They would simply issue a boilerplate statement to the effect that:” Due to European Union restrictions on reporting when rating debt within their legal jurisdiction, [insert name of rating agency] will not express any opinion on the worth or lack thereof of any such issuance.”.
2) in a rational investment world, investors would either take that into account and either refuse to invest in such issues, or demand a risk premium sufficiently large to compensate. I assume that most personal investors are doing so already. Those who stay positioned in European issues are subject to Darwin.
3) sovereign entities and institutional investors are not rational. Sovereign entities have a vested belief in their own invulnerability. Institutional investors have political connections that make them believe that no matter what happens, the sovereign entities will make them whole at the expense of taxpayers. Darwin will not be denied, in the end.
#46 Dack Thrombosis
First, those are some lucky Marines; because Australia is one of the best liberty ports for Americans in world.
Second, one can also look at the new deployment as being related to China; however what it means is in question. One can just as rationally see this as a step towards pulling back our sphere of influence and defense away from the Asian periphery. Given what has happened in the last few years, and the nature and inclinations of our National Command Authority; the concept of it being the first step in a withdrawal and a willing acceptance of the consequences thereof ranks as high in probability as it being a reinforcement of our position in Asia.
Subotai Bahadur
A buddy of mine related to me that when he was stationed — secretly — in Thailand in ’61-62, his unit found a high incidence of venereal disease in Thailand. When the King got wind of this, he declared STDs “illegal,” and announced that there was no such thing as venereal disease in Thailand.
Perhaps tertiary syphillis is causing Eurocrats to be just as irrational.
50. I wonder which king of Thailand that was. I have a feeling they quietly replace him each time he dies – a joke running for 65 years now.
http://www.zerohedge.com/news/entire-system-has-been-utterly-destroyed-mf-global-collapse-presenting-first-mf-global-casualty
MF Global exposes a dark underbelly of deceit…