EU: Fitch says comprehensive solution to eurozone crisis is 'beyond reach' - statement in full

The Telegraph ^ | 12/16/2011

[bruinbirdman]

Fitch Ratings has placed the ratings of all investment grade rated eurozone sovereigns and their debt with Negative Outlook onto Rating Watch Negative (RWN). The euro area country ceiling of 'AAA' is unaffected. The rating actions are as follows:

- Belgium 'AA+'/'RWN from 'AA+'/Negative Outlook ('F1+' Unaffected)

- Spain 'AA-'/'F1+'/RWN from 'AA-'/'F1+'/Negative Outlook

- Slovenia 'AA-'/'F1+'/RWN from 'AA-'/'F1+'/Negative Outlook

- Italy 'A+'/'F1'/RWN from 'A+'/'F1'/Negative Outlook

- Ireland 'BBB+'/'F2'/RWN from 'BBB+'/'F2'/Negative Outlook

- Cyprus 'BBB'/'F3'/RWN from 'BBB'/'F3'/Negative Outlook

The RWN indicates that the above ratings are under active review and are subject to a heightened probability of downgrade in the near-term. Fitch expects to complete the review by the end of January 2012. If the review concludes that a downgrade is warranted, it is likely be limited to one or two notches.

Following the EU Summit on 9-10 December, Fitch has concluded that a 'comprehensive solution' to the eurozone crisis is technically and politically beyond reach.

Despite positive commitments by EU leaders at the Summit, notably the decision to accelerate the creation of the European Stability Mechanism (ESM) and to place less emphasis on private sector involvement (PSI), the concerns held by Fitch prior to the Summit remain pressing and have not been materially eased by the Summit outcome (also see, 'Summit Does Little To Ease Pressure on eurozone Sovereign Debt,' 12 December).

Of particular concern is the absence of a credible financial backstop. In Fitch's opinion this requires more active and explicit commitment from the ECB to mitigate the risk of self-fulfilling liquidity crises for potentially illiquid but solvent Euro Area Member States (EAMS).

Fitch recognises that the policy authorities in all of

[Vince Ferrer]

Worthy of a Friday night dump.

[JustTheTruth]

Banksters and speculators will never be satisfied with “solutions” that dont cover their bad bets with currency created as part of newly produced debt-money. They will only be satisfied by persuading politicians and central banks to keep the Ponzi going, expanding unmanageable levels of debt, socializing private losses, and pumping up nominal values of their favored asset classes.

[JustTheTruth]

Banksters and speculators will never be satisfied with “solutions” that dont cover their bad bets with currency created as part of newly produced debt-money. They will only be satisfied by persuading politicians and central banks to keep the Ponzi going, expanding unmanageable levels of debt, socializing private losses, and pumping up nominal values of their favored asset classes.

[Vince Ferrer]

The best solution would be for the Fed to buy up trillions of dollars of these bad assets held by all these banks, Fannie, Freddie, etc., and then just to declare bankruptcy. The assets can be bought at bankruptcy for pennies on the dollar which would be good for the economy to reprice assets to market value, one bank goes bankrupt, (the one that caused the whole thing), and every one else might come out pretty much ok. We don’t go into hyper inflation, because a lot of virtual money goes poof with the Fed.

[Mariner]

That's a sober and reasoned idea.

However, most of the world does not want to suffer the 40-60% deflation that would result.

They will anyway...but they're going to try to put it off.

[ChildOfThe60s]

The intensification of the eurozone crisis since July constitutes a significant negative shock to the region's economy

Measurable deterioration in 5 months. *Publicly admitted* deterioration - that is very telling.

The chances of a public run on banks in the EZ are growing daily. When the match is struck that sparks it, it will happen very quickly. I believe that the governments will be making public statements that things are under control right up to the night before all hell breaks loose.

[JustTheTruth]

First, the bank equity holders of insolvent banks (truthful accounting) need to be wiped out, their executives fired, their boards replaced, and their bond holders take a MAJOR haircut.

[bruinbirdman]

"First, the bank equity holders of insolvent banks "

Governments are the largest shareholders of most large EUSSR banks. That's why they have been intergovernmental sovereign bond purchasing ponzi schemes for so long.

The euro common currency, in just ten years, has been the catalyst, the stealth capitalism, that has exposed the socialist ponzi scheme.

yitbos