Moody's in a German joke production

What does the Moody's lowering in the credit rating outlook of Germany mean? Nothing. Just like with the USA fall of rating that changed nothing. No interest rate increase, no price-fall of bonds. In fact the credit rating is something important for the real investors - i.e. these ones that invest and risk their own money. Credit ratings does not affect political dependent investors, backed by a money-print machine.

 Just like FED is financing the US government, the ECB is financing the leading EU governments. Germany or France will never go out of money, because they are in control of ECB that will always print enough Euros for their bonds.

In addition, Germany has a statute of safe haven. Investors need where to put their money in uncertain times. They are more interested in the real risks than in the opinion of already devalued authorities like the old credit rating agencies. From time to time we can see even a negative yield on German bonds. The obvious reason for this is the risk of a Euro-zone disintegration and entire disappearing of the Euro. In this case the holders of German debt will receive Deutsche Marks while the holders of other debts will receive money in their currency - pesetas, drachmas, francs.

Germany is still the main fulcrum of EU. But even if it fails to save the Euro and the Union itself, in Germany the possible damage will be the least of all.

July 24th 2012

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