Tag Archive | "ratings"

S&P Not Loving US’s Longterm Debt Outlook

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Sayeth the ratings agency:

Standard & Poor’s Ratings Services said today that it affirmed its ‘AAA’ long-term and ‘A-1+’ short-term sovereign credit ratings on the U.S. Standard & Poor’s also said that it revised its outlook on the long-term rating of the U.S. sovereign to negative from stable. Our ratings on the U.S. rest on its high-income, highly diversified, and flexible economy. It is backed by a strong track record of prudent and credible monetary policy, evidenced to us by its ability to support growth while containing inflationary pressures. The ratings also reflect our view of the unique advantages stemming from the dollar’s preeminent place among world currencies.

“Although we believe these strengths currently outweigh what we consider to be the U.S.’s meaningful economic and fiscal risks and large external debtor position, we now believe that they might not fully offset the credit risks over the next two years at the ‘AAA’ level,” said Standard & Poor’s credit analyst Nikola G. Swann. “More than two years after the beginning of the recent crisis, U.S. policymakers have still not agreed on how to reverse recent fiscal deterioration or address longer-term fiscal pressures,” Mr. Swann added.

In 2003-2008, the U.S.’s general (total) government deficit fluctuated between 2% and 5% of GDP. Already noticeably larger than that of most ‘AAA’ rated sovereigns, it ballooned to more than 11% in 2009 and has yet to recover.

On April 13, President Barack Obama laid out his Administration’s medium-term fiscal consolidation plan, aimed at reducing the cumulative unified federal deficit by US$4 trillion in 12 years or less. A key component of the Administration’s strategy is to work with Congressional leaders over the next two months to develop a commonly agreed upon program to reach this target. The President’s proposals envision reducing the deficit via both spending cuts and revenue increases.

Key members in the U.S. House of Representatives have also advocated fiscal tightening of a similar magnitude, US$4.4 trillion, during the coming 10 years, but via different methods. House Budget Committee Chairman Paul Ryan’s plan seeks to balance the federal budget by 2040, in part by cutting non-defense spending. The plan also includes significantly reducing the scope of Medicare and Medicaid, while bringing top individual and corporate tax rates lower than those under the 2001 and 2003 tax cuts.

We view President Obama’s and Congressman Ryan’s proposals as the starting point of a process aimed at broader engagement, which could result in substantial and lasting U.S. government fiscal consolidation. That said, we see the path to agreement as challenging because the gap between the parties remains wide. We believe there is a significant risk that Congressional negotiations could result in no agreement on a medium-term fiscal strategy until after the fall 2012 Congressional and Presidential elections. If so, the first budget proposal that could include related measures would be Budget 2014 (for the fiscal year beginning Oct. 1, 2013), and we believe a delay beyond that time is possible.

Standard & Poor’s takes no position on the mix of spending and revenue measures the Congress and the Administration might conclude are appropriate.

But for any plan to be credible, we believe that it would need to secure support from a cross-section of leaders in both political parties. If U.S. policymakers do agree on a fiscal consolidation strategy, we believe the experience of other countries highlights that implementation could take time. It could also generate significant political controversy, not just within Congress or between Congress and the Administration, but throughout the country. We therefore think that, assuming an agreement between Congress and the President, there is a reasonable chance that it would still take a number of years before the government reaches a fiscal position that stabilizes its debt burden. In addition, even if such measures are eventually put in place, the initiating policymakers or subsequently elected ones could decide to at least partially reverse fiscal consolidation.

In our baseline macroeconomic scenario of near 3% annual real growth, we expect the general government deficit to decline gradually but remain slightly higher than 6% of GDP in 2013. As a result, net general government debt would reach 84% of GDP by 2013. In our macroeconomic forecast’s optimistic scenario (assuming near 4% annual real growth), the fiscal deficit would fall to 4.6% of GDP by 2013, but the U.S.’s net general government debt would still rise to almost 80% of GDP by 2013. In our pessimistic scenario (a mild, one-year double-dip recession in 2012), the deficit would be 9.1%, while net debt would surpass 90% by 2013. Even in our optimistic scenario, we believe the U.S.’s fiscal profile would be less robust than those of other ‘AAA’ rated sovereigns by 2013. (For all of the assumptions underpinning our three forecast scenarios, see “U.S. Risks To The Forecast: Oil We Have to Fear Is…,” March 15, 2011, RatingsDirect.

“Our negative outlook on our rating on the U.S. sovereign signals that we believe there is at least a one-in-three likelihood that we could lower our long-term rating on the U.S. within two years,” Mr. Swann said. “The outlook reflects our view of the increased risk that the political negotiations over when and how to address both the medium- and long-term fiscal challenges will persist until at least after national elections in 2012.”

Some compromise that achieves agreement on a comprehensive budgetary consolidation program–containing deficit-reduction measures in amounts near those recently proposed, and combined with meaningful steps toward implementation by 2013–is our baseline assumption and could lead us to revise the outlook back to stable. Alternatively, the lack of such an agreement or a significant further fiscal deterioration for any reason could lead us to lower the rating.

[via MarketWatch]

Article courtesy of Dealbreaker

Opening Bell: 04.07.11

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Feds: Insider Scheme Spanned 17 Years (WSJ)
The alleged scheme revealed on Wednesday stretched back to 1994, when Mr. Kluger allegedly told the co-conspirator while attending law school at New York University and after taking a summer associate job at Cravath that “I’ve got something,” meaning he had access to confidential information, prosecutors said. The co-conspirator then approached Mr. Bauer, whom he had worked with in the 1990s at venture capital firm Weiss, Peck & Greer. Mr. Bauer agreed to trade based on the information provided, prosecutors said. “They structured their relationship so that Bauer and Kluger did not have direct contact prior to the trades,” said Daniel M. Hawke, the regional director for the Securities and Exchange Commission’s Philadelphia office.

Portugal Bailout May Reach $129 Billion (WSJ)
“The talk is for around €75 billion, but this could be raised to around €90billion. A bailout package can be put together very quickly as there has already been preparatory work in anticipation of Portugal’s request,” said the minister, who asked not to be identified.

Moody’s May Take Axe To UK Bank Ratings (Reuters)
Up to 18 British banks could see their senior debt ratings cut several notches by Moody’s over coming months as the rating agency assesses how they would fare without implicit government support. The banks more immediately vulnerable to a downgrade are smaller institutions, including many building societies, rather than larger banks still heavily supported by the state, Moody’s said Thursday.

The Valley’s Banker Returns To The Top (NYT)
Andrew Ross Sorkin: “I’d really prefer you didn’t write about me,” Mr. Quattrone said recently, trying to dissuade me from this column. But it is hard to ignore Mr. Quattrone. In the last year, his boutique advisory firm, Qatalyst Partners, has been involved in nearly every major technology merger. As Hewlett-Packard and Dell battled over 3Par last summer, Mr. Quattrone was calling the shots. He orchestrated the sale of Palm to H.P. for $1.2 billion in April 2010. And Texas Instruments’ $6.5 billion deal to buy National Semiconductor this week? Yes, that was his deal, too.

ECB Raises Interest Rates (WSJ)
The European Central Bank on Thursday raised its benchmark interest rate to 1.25% from a historic low of 1%, as expected, making it the first of the developed world’s major central banks to initiate a cycle of raising rates.

A Hot Idea Falls Short At Goldman (WSJ)
Goldman spent millions of dollars to develop the private exchange, and senior Goldman bankers spent over a year on the project. They gave it an awkward name—the “GS Tradable Unregistered Equity OTC Market” or GSTrUE—but it seemed like an instant success. Los Angeles-based Oaktree Capital Management LLC raised about $1 billion in May 2007, selling a 15% stake in itself on the Goldman market. Two months later, Apollo Management LP, the big New York private-equity firm, also sold shares, raising $895 million. Many bankers expected the new market to steal some of the hottest offerings from the New York Stock Exchange and Nasdaq. Private-equity firms, hedge funds and others that guarded their privacy seemed likely to sell shares there. At the time, Oaktree partners Howard Marks and Bruce Karsh predicted in a memo to clients that “a number of premier companies in other industries” would join their firm on the Goldman platform. Rival banks and exchanges soon launched competing private markets. Then a curious thing happened—hardly any investors showed up.

Sailor, 85, crosses Atlantic on raft with friends (MSNBC)
A stroke of bad luck for Anthony Smith paid for the trip (he was hit by a van and broke his hip). “I got some compensation money,” he said. “So what do you blow the compensation money on? You blow it on a raft.”
Slower Recruitment In London (FT)
City hiring in 2011 is unlikely to reach the heights of last year when banks snapped up staff in a fight for market share, Robert Walters, the white collar recruitment firm, said on Wednesday. “Last year was an unrepeatable correction,” Robert Walters, chief executive of the eponymous firm, said. “Banks had made savage cuts during the financial crisis and they needed to replenish staff quickly. But that was a one-off. Now we’ll have to wait and see.”

RAB Says Clients to Pull 79 Percent of Flagship Fund’s Assets (Bloomberg)
The hedge fund will allow investors to withdraw money when a three-year freeze on client redemptions ends on Oct. 1, the London-based firm said in a statement today. The fund, run by co-founder Philip Richards, had $2 billion at December 2007. The fund slumped 73 percent in 2008, hurt by a bet on Northern Rock Plc, the first British bank nationalized during the credit crisis. RAB won investor approval to halt redemptions in September 2008. The fund declined 7.6 percent in 2010.

Marc Lasry & Team OKed To Control Trump Casino (AP)
Lasry’s Avenue Capital was given final approval Wednesday by New Jersey casino regulators to control the Atlantic City casino company that was founded by Donald Trump. Avenue, which specializes in distressed investments, won the company in a bankruptcy battle last year, and is the largest shareholder at nearly 22 percent.

Sokol Joins Brandon Winning Praise In Buffett Head-Scratcher (Bloomberg)
Sokol’s contributions to Berkshire were “extraordinary,” Buffett said when he announced his resignation March 30. Buffett said in 2009 that Brandon helped in “righting the ship” at General Re. Brandon left in 2008 after prosecutors named him an unindicted co-conspirator at a trial where four former General Re officers were convicted of helping American International Group deceive investors through a sham transaction.

Should There Be A Fat Tax? (CNBC)
Arizona says yes.

Article courtesy of Dealbreaker

SPWRA, JASO: Piper Trims Outlook, Prefers LDK, DQ, SOLR

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As I wrote earlier today, stocks of companies supplying solar energy technology have gotten a big lift from the sense that nuclear energy policy may be re-examined based on the terrible destruction in Japan last week and over the weekend.

Analysts continue to parse the company-specific implications. Piper Jaffray’s Ahmar Zaman today cut his ratings on several solar names, arguing that they will be hit with two negative consequences: some shortfall in demand in Japan, and a shortfall in supply of critical materials, especially polysilicon.

Zaman cut his ratings on Canadian Solar (CSIQ) and Suntech Power Holdings (STP) to Underweight from Neutral; and he cut SunPower (SPWRA), JA Solar (JASO), Trina Solar (TSL) and Yingli Green Energy (YGE) to Neutral from Overweight. Zaman reiterated an Overweight rating on First Solar (FSLR) and Satcon Technology (SATC), Daqo New Energy (DQ), the Hong Kong-listed shares of Shanghai-based Comtec Solar Systems, LDK Solar (LDK), and GT Solar (SOLR).

With Japan accounting for 19,000 metric tons of polysilicon manufacturing capacity, and a collective 650 megawatts of wafer capacity, Zaman sees the rolling blackouts and other factors affecting the supply chain disrupting production and driving up polysilicon prices to $70 per kilogram. That should help DQ, LDK, SOLR, and Comtec, he believes.

Although Japan is not a big market for non-Japanese firms, in terms of solar demand, Zaman writes that there’s some risk that Kyocera and Sharp will export solar energy modules to other markets to make up for a shortfall in domestic demand.

“This could put pressure on near term module pricing,” writes Zaman. “More importantly, we had been counting on Japan to be one of the markets with upside in 2011 to offset any decline in Italy…now with demand in Japan in question, we believe module oversupply concerns will likely be amplified near term. “

Article courtesy of Tech Trader Daily

INTC: Baird Ups To Buy On Broad-Based Semi Recovery

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R.W. Baird & Co. semiconductor analyst Tristan Gerra today raised his ratings on Intel (INTC), Altera (ALTR), Fairchild Semiconductor (FCS), ON Semiconductor (ONNN), ST Microelectronics (STM), and Lattice Semiconductor (LSCC) to Outperform from Neutral.

Gerra sees a “continued rebound in order trends for semiconductors,” with inventory of chips “lean” and the prospect that gross profit margin will continue to be above the historical average for the companies.

I would note that Gerra’s observations echo a broadly positive upgrade of the chip sector by JP Morgan’s Christopher Danely on Wednesday.

“Our recent field research in Asia points to a continuation of positive trends, notably a 2Q rebound in PCs post Intel-induced weakness in 1Q, above-seasonal smartphone demand, and overall lean inventories,” Gerra writes.

“We view the recent market pullback as an opportunity, even though we are currently into the second-half of a semiconductor epicycle.”

A rebound in PC orders in April, following a “trough” in February related to Intel’s recall of some support chips for its “Sandy Bridge” processor, should lead to better-than-seasonal revenue for Intel, he thinks. He also thinks the threat of a broad-based shift to processors based on ARM Holdings (ARMH), and away from some of Intel’s processors, is “fully priced in” to Intel’s stock.

Note, Gerra also warns that, “Additionally, we see signs of component overbuilt in tablets based on likely too-optimistic unit expectations for the year ex Apple (AAPL).”

As for the others, Gerra sees Altera as better positioned than Xilinx (XLNX), which he rates Neutral, with “flawless execution,” and he expects that the conversion of wireless networks to 4G, or “Long Term Evolution” cellular technology, will “add a new growth layer” this year for Altera’s programmable chips.

Fairchild has “significantly” improved its fundamentals of late, and Gerra sees the company being helped by “an on-track Q1 in analog” chips.

Lattice’s start-up of its 65-nanometer production of programmable logic devices is moving more swiftly than did the shift to 90 nanometer, which bodes well for future market share gains, if history is any guide, he writes. Also, Lattice has a safe niche at the low end of the market while Altera and Xilinx battle it out for the pricier chips, he thinks.

As for ON Semiconductor, its ability to successfully integrate the assets it purchase from Sanyo is leading him to raise his EPS estimate for this year to 21 cents from 7 cents.

ST Micro is continuing to build cash flow with its momentum in discrete semiconductors, and it is gaining market share in more profitable MEMS sensor products and 32-bit microcontrollers.

Gerra raised his price target on Altera to $53 form $48; his Fairchild target goes to $28 from $16; his Intel price target is $27, up from $25; his Lattice target is $10, up from $7; his ONNN target is $16, up from $12; and his ST Micro target is $17, up from 12.

The stocks are trading thusly today:

INTC down 5 cents at $21.74;
ALTR up 19 cents, or 0.4%, at $44.39;
FCS up 39 cents, or 2%, at $19.15;
ONNN up 19 cents, or 1.7%, at $11.27;
STM unchanged at $13.07;
and LSCC up 36 cents, or 5.3%, at $7.20.

Article courtesy of Tech Trader Daily

Anyone Want A Job With Meredith Whitney?

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Have you been dying to work under Meredith Whitney but hadn’t heard of any openings at the firm? Now’s your chance! As you may have heard, Whitney is starting her own ratings agency and has applied to become a Nationally Recognized Statistical Ratings Organization (NRSRO. Fortune’s Katie Benner has some of the details, including a presentation of the biz submitted to the SEC. Apparently there are many opportunities for candidates– MW expects that she’ll hire 200 people in the first year and grow to 650 by year three. On dollars and cents, Whitney says she’ll pay analysts $225,000 a year (to top Moody’s $212,200). Inquire today.

Meredith Whitney

Inside Meredith Whitney’s Ratings Agency [Fortune]

Article courtesy of Dealbreaker

Opening Bell: 02.01.11

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Jordan’s King Abdullah Replaces Prime Minister (Bloomberg)
Jordan’s King Abdullah replaced his prime minister following street protests and asked former premier Marouf Bakhit to form a new government that will launch a “genuine political reform process.” Abdullah told Bakhit that he should put the country on the path “to strengthen democracy,” and provide Jordanians with the “dignified life they deserve,” the Royal Court said in an e-mailed statement.

Egypt Ratings Cut at S&P on Unrest; May Lower Further (Bloomberg)
tandard & Poor’s cut the long-term foreign currency debt rating on Egypt to BB, two levels below investment grade, and lowered the long-term and short-term ratings of local currency bonds to BB+/B from BBB-/A-3. “The ongoing political instability and unrest will hamper Egypt’s economic growth and adversely affect its public finances,” the rating agency said in a statement today. The long-term ratings were placed on creditwatch negative, indicating that more downgrades may follow, possibly by “more than one notch,” according to the statement.

Officials Warn Wall St. About Possible Terror Attacks (Reuters)
Security officials are warning the leaders of major Wall Street banks that al Qaeda terrorists in Yemen may be trying to plan attacks against those financial institutions or their leading executives, NBCNewYork has learned. Intelligence officials stressed the threats are general in nature and there is “no indication of a targeted assassination plot” against any Wall Street executive. But NBCNewYork.com learned that officials fear the names of some top banking executives have been discussed by terror operatives overseas.

Rising Rates Fuel Boomlet In Buyout (WSJ)
Increased investor interest “absolutely means we’re much more confident competing in sale processes,” said Adam Blumenthal, co-founder of private-equity firm Blue Wolf Capital, which specializes in transactions for smaller companies. “Sellers are confident that if we come in and say there will be a financing package on the table, it will be there.”

Storm Cancels Flights, May Set Chicago Record, Ices New York (Bloomberg)
“It’s going to be a two-stage storm and the strongest punch will be late Tuesday night into Wednesday,” meteorologist Nelson Vaz said by telephone. “Anytime you’re talking over a tenth of an inch to a quarter of an inch of ice, that can cause problems. It is going to be hazardous conditions.”

Taxes Boost State Coffers (WSJ)
State tax collections increased 6.9% in 41 states that have reported their revenue, according to a report to be released Tuesday by the Nelson A. Rockefeller Institute of Government at the State University of New York. If that pace of gains holds once the rest of the states have reported, it would be the fastest growth in tax revenue since the second quarter of 2006, which was more than a year before the recent recession began.

Article courtesy of Dealbreaker

Verizon Up, AT&T Down At Goldman

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Goldman Sachs analyst Jason Armstrong today flipped his ratings on Verizon Communications (VZ) and AT&T (T) in the wake of yesterday’s unveiling of the Apple (AAPL) iPhone at Verizon: Verizon becomes a Buy, from a Neutral, with a $42 price target, up from $34, and AT&T becomes a Neutral from [...]

Article courtesy of BARRONS.com: Tech Trader Daily

Solar: Auriga Sees Better Times Ahead

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Auriga Securities analyst Mark Bachman this afternoon writes that solar technology vendors will “retake the skies” in 2012, as he raised his ratings on two stocks, JA Solar (JASO) and Canadian Solar (CSIQ) to Buy, and cut SunPower (SPWRA) to Sell.
A better-than-expected outlook this morning by LDK Solar (LDK) had [...]

Article courtesy of BARRONS.com: Tech Trader Daily

Opening Bell: 12.21.10

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SEC Probe Examines Hurd Exit From HP (WSJ)
As part of the probe, the Securities and Exchange Commission is checking whether Mr. Hurd passed information about H-P’s $13.9 billion acquisition of technology-consulting company Electronic Data Systems Corp. to a former H-P event hostess in 2008, before the deal was announced, the people said. Mr. Hurd has denied having an inappropriate relationship with the H-P contractor, Jodie Fisher, whose accusation of sexual harassment led to his ouster from atop the technology giant in August. The SEC is also looking at Mr. Hurd’s use of corporate expenses in his dealings with Ms. Fisher, these people said.

Blackstone Raises $15 Billion Fund For Buyouts (WSJ)
Though most of Blackstone’s longtime investors in the U.S. and Europe are participating, they’ve committed smaller sums compared with previous funds, these people say. To entice interest, Blackstone gave those willing to write checks of about $500 million better terms than others, according to the people. In the past, a $1 billion commitment was enough to elicit improved terms, they say. Some of the fund-raising challenges stemmed from investor concerns with private equity that have grown since the financial crisis, including the long-term and illiquid nature of the investments. It’s also been harder for private-equity firms to return cash to their investors, since the IPO market remains difficult. “It was like a rock fight,” said one Blackstone executive who was part of the fund-raising effort. “A long hard fight.”

Europe Bankers To Get Salary Hikes Due To Bonus Rules (FT)
Many US and Swiss banks are considering paying higher salaries and lower bonuses to top bankers based in the European Union, mostly in London, to ensure they comply with new instructions from the Committee of European Banking Supervisors (CEBS), the pan-EU regulator, limiting cash pay-outs. Some European politicians had expected that non-EU banks would apply their rules globally on a voluntary basis. But one senior European banker said: “Politicians are naïve if they think we will impose EU rules on a global basis. The ironic effect will be another hike in salaries, which is a fixed cost, which rather makes a nonsense of the idea of pay for performance.”

TD Bank To Buy Chrysler Financial For $6.3 Billion (Reuters)
Toronto-Dominion Bank has agreed to buy Chrysler Financial from private equity firm Cerberus Capital Management for $6.3 billion, making Canada’s No. 2 bank one of North America’s top five bank-owned auto lenders. TD said Tuesday the purchase consists of net assets of $5.9 billion and about $400 million in goodwill.

African Gold Rush Kills Children As Miners Find Lead Dust (Bloomberg)
Gold fever brought death to Umoru Musa’s nine-family compound in Sunke, a mud-brick village in northern Nigeria. Five of the 25 children, including Musa’s 1-year-old daughter Nafisa, lost their lives in May after villagers ground ore from nearby hills they didn’t know were also loaded with lead. Rising prices for gold promised a windfall. Instead, they helped unleash the deadliest lead-poisoning crisis in modern medical history. As the adults pulverized rocks with their grain grinder, they spewed lead dust across the ground where their children played and poultry grazed. They spread more of the material, lethal to children in high doses, around the communal well where they washed the ore to sift out the gold. “This gold cost us a lot,” Musa, 40, said in the open-air courtyard of his home last month as a clean-up team in white respirator masks cleared away lead-laden dirt. “There is nothing God can give that is better than a human being.”

Investments Boost For Paulson And Co (FT)
Paulson’s flagship $9bn Advantage Plus Fund, which in September was down 11 per cent for the year, has staged the most dramatic recovery. According to an investor, the fund was up 10.2 per cent for the month as of December 10. It is now up 14.3 per cent for the year. The fund is understood to have continued its strong performance this week. The Advantage Plus Fund trades around corporate events, such as mergers and acquisitions or bankruptcies. The firm’s Credit Opportunities Fund is up 4 per cent so far this month, bringing its performance to 16.5 per cent for the year so far. Mr Paulson’s Recovery Fund, which is focused on the US economy and its prospects, also returned 10.2 per cent over the first 10 days of December. The Recovery Fund is now up 19.4 per cent so far this year.

Moody’s Warns It May Cut Portugal’s Ratings (WSJ)
“In Moody’s opinion, Portugal’s solvency is not in question,” said Anthony Thomas, Moody’s vice president and lead analyst for Portugal. “But the likely deterioration in debt affordability over the medium term and ongoing concerns about the economy’s ability to withstand fiscal consolidation and private sector deleveraging mean its outlook may no longer be consistent with an A1 rating.”

European Banking Fees Shrivel Amid Sovereign Crisis (Bloomberg)
Income from arranging mergers, stock, bond and loan sales in Europe, the Middle East and Africa dropped about 10 percent from 2009 to $21.9 billion, estimates by New York-based research firm Freeman & Co. show. Fees in Asia jumped 18 percent to $17.8 billion, narrowing the gap with Europe to the lowest since at least 1998. At that rate, revenue from Asia may surpass Europe in 2011, according to Freeman.

China Frets About Spreading EU Debt Woes (Reuters)
“We are very concerned about whether the European debt crisis can be controlled,” Chinese Commerce Minister Chen Deming said at a trade dialogue between China and the European Union. “We want to see if the EU is able to control sovereign debt risks and whether consensus can be translated into real action to enable Europe to emerge from the financial crisis soon and in a good shape,” he said.

New York Leads In Pursuit Of Lehman (WSJ)
In 2001, the regulator of the nation’s biggest banks told its examiners to be on the lookout for firms whose regulatory filings made them look healthier than they really were. That followed guidelines issued in 1990 that said banks could face disciplinary action if their filings “have significant inaccuracies or are ‘window dressed.’ ” But as early as this week, it is the New York attorney general—not the Office of the Comptroller of the Currency, the bank regulator—who is expected to file a lawsuit alleging accounting firm Ernst & Young LLP allowed Wall Street broker Lehman Brothers Holdings to fake its books so it could appear financially healthier.

Article courtesy of Dealbreaker

Ireland: Fitch Has No Idea What It’s Talking About

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Earlier today, Fitch downgraded Ireland three notches to a triple-B plus rating, citing “weaker prospects and greater uncertainty regarding the economy as a result of the intensification of the financial crisis,” noting that Ireland’s sovereign credit profile is no longer consistent with a high investment grade rating.” According to the Emerald Isle, this is bull shit.

A source close to the government contradicted Fitch. “Contrary to the Fitch analysis,” the person said, “the exchequer deficit has not deteriorated further in the past year but has stabilized.”

Fitch Downgrades Ireland [WSJ]

Article courtesy of Dealbreaker