Moody's downgraded Italy three notches from AA2 to A2

[Mich the Tester]

Italy is a basket case of an economy, even the romans shipped out to Turkey when the corruption got too much.

Not true; it has a basket case government, but Italy's businesses are very strong.

[Arturo Bassick]

I understood that the debt accrued by Italy had been used to fund infrastructure and growth. Where as the other struggling nations, Greece in particular and the UK to no small extent, had borrowed to pay wages and interest on other loans.
The Italian way is sustainable and they can stop borrowing and start paying off without too much in the way of austerity. The other nations have no such options.

I had assumed that my understanding is vastly wrong as it seems all the worlds experts are pointing at Italy as a basket case.
Is it a double bluff? The EU will rescue Italy and then point to them as a resounding success, a sure sign that the EU works.

So what is the truth of it?

[Mich the Tester]

So what is the truth of it?

The truth is that the world's 'experts' are generally charlatans and conmen, especially ratings agencies and I think the mortgage backed securities mess proved that for anyone with a functioning brain.

[minestrone]

Not true; it has a basket case government, but Italy's businesses are very strong.

Fiat's market cap is 4.5 billion, it is not a big company. BMW have a market cap of 30 billion. Mercedes Benz are about 25 billion, Audi 16 million, Volkswagen 34 billion. Do not think Italy can get through this by saying they have Fiat.

[Mich the Tester]

Fiat's market cap is 4.5 billion, it is not a big company. BMW have a market cap of 30 billion. Mercedes Benz are about 25 billion, Audi 16 million, Volkswagen 34 billion. Do not think Italy can get through this by saying they have Fiat.

You mean FIAT cars obviously. I mean the FIAT group, which is immense.

[minestrone]

You mean FIAT cars obviously. I mean the FIAT group, which is immense.

The FIAT group has a market cap of 4.5 euros but when you look at HSBC which has a market cap of 84 billion pounds you see that is small fish. Lloyds have a market cap of 27 billion, RBS 23 billion.

[Mich the Tester]

The FIAT group has a market cap of 4.5 euros but when you look at HSBC which has a market cap of 84 billion pounds you see that is small fish. Lloyds have a market cap of 27 billion, RBS 23 billion.

SO how does a company with 70 billion of assets have a market cap of 4.5 billion? Is that because the markets are now so skewed that we shouldn't actually take these valuations seriously?

[minestrone]

The truth is that the world's 'experts' are generally charlatans and conmen, especially ratings agencies and I think the mortgage backed securities mess proved that for anyone with a functioning brain.

The ratings agencies are an opnion of trust to repay a debt, I am not sure how think their opinion is somehow wrong and you are right on this. I would say your opinion on their opinion is mince. Italy cannot repay its debts, it will take 100 years to even come close and Moodys are quite right to say there is a good chance money invested in their Goverment will not be returned. Is that so hard to understand?

[Mich the Tester]

The ratings agencies are an opnion of trust to repay a debt, I am not sure how think their opinion is somehow wrong and you are right on this. I would say your opinion on their opinion is mince. Italy cannot repay its debts, it will take 100 years to even come close and Moodys are quite right to say there is a good chance money invested in their Goverment will not be returned. Is that so hard to understand?

Moody's gave as a reason 'market sentiment', which is something they themselves influence to a great extent. They also know perfectly well that by downgrading Italy's debt they make it more difficult to pay it off as the state has to pay more interest on its loans. This is not economics; it's self fulfilling prophecies on the part of a bunch of charlatans and crooks who haven't even been prepared to declare their interests to the SEC. They failed to understand what a mortgage backed security is and now hold governments to ransome all over the world. It is time they are brought to justice for criminal negligence and a complete lack of transparency about conflicts of interest.

[Mich the Tester]

"Moody’s Assumed 4% Annual Home Price Rises in Bond Rating Model" - not entirely unreasonable given that normal inflation has always been around that number anyway.

What was totally unreasonable is that they rated dodgy loans as AAA and as the result banks started giving them to anybody who was willing to get 'em.

In any other 'profession' they'd be prosecuted for criminal negligence.