Europe

It Is Time for Brutal Moody's


Jean-Claude Trichet on February 17, 2012 in Paris

Photograph by Patrick Kovarik/AFP/Getty Images

Jean-Claude Trichet on February 17, 2012 in Paris

“We have had a close dialog with Moody’s in recent months,” Henrik Ramlau-Hansen, Danske’s chief financial officer, said. “We are certain that Moody’s has heard our arguments, but we do not think they are reflected in the rating the bank has received.”

—Christian Wienberg, Moody’s Downgrades Danske, Eight Other Danish Financial Firms, Bloomberg News, 30 May 2012, 5:31 PM

There are several immovable objects to our collective euro-irresponsibility. The unreal, and disintegrating, real economy; incoming tax receipts of a diminished size; outgoing, fleeing youth; and then, the rating agencies stepping lightly so as not to invent “brutal” instability (see Trichet, vintage 2006).

I have presumed for ages that Europe will exit its spiral of discontent only when the agencies rate the argumentative banks. (Can there be such a thing as AAA-Clueless?)

These are convex times. Times that President Trichet was able to kick down the Rue. It is time for the constraints to set in. It is time for brutal Moody’s. Discuss.

Keene hosts Bloomberg Surveillance 7-10 a.m. ET on 1130 AM in the New York metro area and nationally on SiriusXM 113.

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