S&P cuts Ireland rating to AA on bank rescue cost - Monday, June 08, 2009, for the second time in 3-months and since the debt crisis began, Standard and Poor's cuts Ireland's sovereign credit rating to "AA" with a negative outlook! They cite the sky rocketing cost of bailing out the country's banking system. Other rating services, Fitch also had cut Ireland's debit in April and Moody's warned of a pending cut, so the ratings rivals are once again all pretty much in line with each other's timing!
It is not a matter of IF but WHEN the asset quality of the "Celtic tiger" will deteriorates further; The Prophet predicts they surely will! At which time, the rating agencies will be FORCED to cut Ireland’s debt further! In the short-term, this all raises the cost of protecting and issuing Irish Government Debt. The much larger question is how quickly, will further downgrades due to the mass worldwide over-leveraging and debt contagion spread to the UK, EU and ultimately the US and the world! Here again, The Prophet says it is only a matter of time here as well! The rating agencies have been inept a best, generally completely missing the calls due to what many believe are inherent conflicts of interest in their compensation structure!
Today’s downgrade continues to be the only the "tip of the iceberg" and the Prophet Counsel predicts that for everyone talking about greens shoots and the end to the recessions will be embarrassed by how far off they continue to be in the months and years to come. Of course, that is when the perma Bulls will simply tell you "there was no way of them knowing things were going to get so bad" but at which time it will be of little compensation to your net-worth!
The Prophet is not predicting an immediate end to this bear market rally but a significant correction is perhaps already beginning! Although, we believe that this is in fact a bear market rally and will turn out to be, very close to the mother of all head fakes!
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