Lords Standard & Poor's.

 Office of Standard & Poors.

 Rating agency.

 The couple : Merk-osy.

Wolfgang Schaüeble, German finance minister.

Countries of the Euro- zone.

 Euro currency

 

 Europeen Central Bank, Frankfurt, Germany.

 

I.M.F chief Christine Lagarde.

Ratings from Standard & Poor's.

Many Standard & Poor's rating changes took place this year, 2011. Let's take things chronologically.

August 5, 2011

The rating agency Standard and Poor's lowered Friday, August 5, 2011, the rating assigned to the public debt of the United States, assessed "AAA".
The United States are thus deprived of their "AAA" for the first time in their history, incurring the risk of political turmoil, the challenges of the budget deficit (and this, it started in early summer, in the Congress, by a split between Republicans and Democrats).
Standard and Poor's said in a statement it had lowered the rating by one notch, the best possible, to bring it to "AA +". It also downgraded the outlook to "negative", which means that Standard and Poor's believes that the next time the note will change, it is to be lowered again.
It justified its decision by "political risks" to see countries take insufficient action against its budget deficit.
For Standard and Poor's, the political debate on these issues is not up to the problems caused by a debt of more than 16,000 billion.
The “Sunami like” caused by Standard and Poor's in America has made waves that came to affect, not only the European economy, but also the economies of Japan, Korea and Chine.

Friday  25.11.2011.

While the Euro area plunged into crisis, Standard and Poor's, this Friday, 25.11.2011, lowered by a notch the sovereign rating of Belgium.
The rating agency is concerned that the country already heavily indebted, should intervene to support its financial sector. Standard and Poor's lowered the rating of "AA +"  to  "AA", highlighting the debt of the Belgium kingdom.

It is said that the political crisis through which it passes paralyzes currently discussing the next budget.
The agency is particularly concerned that the "difficulties of the financial sector" require more support by the government which would increase the already high debt of the country, in a context of "political uncertainty" that continues to affect the credibility of Belgium as a borrower.
The rating "AA" from Belgium, which belongs to the category of "high quality" borrower, is accompanied by a negative outlook.
If Belgium had again come to the rescue of the banking sector, as in 2008, its debt, which should reach 97% of GDP at the end of the year could exceed 100%, says the agency.

Tuesday December 6, 2011.

Almost right after (about 3 hours) the announcement of the conclusion of a final agreement on the Euro zone between France and Germany, Standard and Poor's announced that it intends to scale back the notes of Six countries in the Eurozone, the six best performing countries in Europe, if not the world.

That is, countries in better economic health, in other words, France, Austria, Germany, the Netherlands, Slovenia and Slovakia.

According to Standard and Poor's, there is a risk for France to lose even two points.

There, without the declaration of Standard and Poor's, the recession could be, if not, an extension of economic crisis.
But now, with the announcement of the revision notes of the most emerging countries, the recession will born, for sure.

What is Standard and Poor's? What Standard and Poor's seeks to demonstrate?

But first, who is Standard and Poor's? Who is working for this agency?

Who is its staff? Who are its economists?

What training and global knowledge have its employees?
In a word, Who are these Lords?
Lords, they are, they shake the planet each time they make a statement !
And why is it that the world should tremble at the news of degradation of a note. They make and break states, and economies all around the world. "

The degradation of the note of the United States from AAA to AA this summer, had as result,  to plunge the United States into a severe recession, causing unemployment and anxiety!
 
The degradation of the Standard & Poors rating of  a country comes always as a burden to that country.

It troubles its  budget  and causes a deficit of a country.

This was noticed for Greece, Ireland, Portugal, Spain, and more recently the United States.
And now troubles threaten Italy, the third European economy.

Standard and Poor's again, threatened the country by the same phenomenon.
 All countries above mentioned, have a structure, among the most open in the Euro area, and a transparent book keeping.
But the economies of these countries would be "vulnerable to any weakening of external demand," said Standard & Poors.

It should be noted that Standard and Poor's is not the only rating agency. There are others, such as Moody's.

About Belgium, Standard and Poor's also points out that the Belgian Government, if it has taken effective measures in 2011 to reduce the primary deficit, has now, not the freedom to implement major structural reforms .
The reason is: the political crisis of the kingdom which has still no  government for more than 550 days, after the last parliamentary elections.
The leader of the Socialist francophone party,  Elio Di Rupo, is responsible for forming the future government. The king Albert II asked him recently to get back to work anyway.
Belgian television showed, however, that Mr. Di Rupo had resumed discussions on the budget 2012 by bringing together the presidents of six parties involved in the negotiations.
Belgium needs to find 11.3 billion euros to board the deficit below 3% of GDP in 2012, as required by the EU.

The situation is even more urgent that, in markets, borrowing rates soar to 10 years in Belgium and are close to 6%.
This is also true of Italy, despite the arrival into the government of Mario Monti, Super Mario as we have known.
For Greece, despite the deletion of a large part of the debt, the borrowing rate should be around 9-10%.
Leaders of different countries in trouble with their external debt, are also facing pressure from the European Commission and the IMF
For Belgium, the European Commission threat of punishment by a fine of 700 million euros if a tight budget is not completed by mid-December.
In summary, these rating agencies, particularly Standard & Poors are so powerful, that they did shake the whole governments.
Thus, it is not street protests, nor popular anger that have fallen governments like Socrates in Portugal, Greece ´s Papandreou, and Berlusconi´s in Italy, but the rating agencies, including Standard & Poors.
Who benefits from Standard & Poors ratings?
There are perhaps two reasons to this.
The ratings benefit borrowers in different countries, when the note is good, as AAA. This allows a country to borrow at a low rate of 1 to 2%, such as Germany.
The ratings benefit individual borrowers, and speculators, when the note is low. Bringing the borrowing rate to 5, 7 or even 10%, like for Grece now.

Nafredy