Wednesday, 30 November 2011 05:56

Where Are The Ratings Agencies Before UK & German Banks Go Boom? How About Those Euro REITs? Agencies Anybody? Featured

Slide1Last week I illustrated the interconnected EU master duo with the most ironic of divergent agendas: When The Duopolistic Owners Of The EU Printing Presses Disagree On The Color Of The Ink!  Basically, Germany and France are pulling in two different directions trying to get off of a boat that will drown them both, regardless. Then I posed the taboo question: Are The Ultra Conservative Dutch Immune To Pan-European Pandemic Contagion? Are You Safe During An Earthquake Because You Keep Your Shoes Tied Snugly?

The Dutch are probably in for a banging that the vast majority of the populace are not expecting. The presentation below is a subset of the keynote speech that I gave at the ING CRE Valuation Conference in Amsterdam last April. Some may say it was quite prescient. I'd say it was a matter of paying attention.

Before you peruse through the Power Points and related videos, glance over Interbank_Contagion_in_the_Dutch_Banking - 2006 (pdf)  and then review Cross_Border_Bank_Contagion_in_Europe_- 2006 (pdf). It is apparent that I wasn't the only one who used calculators and common sense before it was too late. To wit:

We investigate interlinkages and contagion risks in the Dutch interbank market. Based on several data sources, including survey data, we estimate the exposures in the interbank market at bank level. Next, we perform a scenario analysis to measure contagion risks. We find that the bankruptcy of one of the large banks will put a considerable burden on the
other banks but will not lead to a complete collapse of the interbank market. The exposures to foreign counterparties are large and warrant further research.

The following presentation shows not only Euro-area banks going bust but European CRE as well. So, why aren't German and UK banks - and REITs (yes, even Dutch REITs) on negative watch with the ratings agencies? And even more interesting question is why isn't the industry that I prepped my subscribers for in regards to the next forensic report beng put on watch by the ratings agencies? The quick answer is... Because they know they'll get paid to come to a pile of smoldering ashes with a fire hose, anyway. Let this be the official declaration: The man that called the fall of WaMu, CountryWide, Bear Stearns, Lehman Brothers, and GGP as well as the problems of about 32 regional US banks as well as the Pan-European Sovereign Debt Crisis (all while these enttities were investment grade and AAA rated) is now calling BS to the ratings agencies as they fail to take it to the UK, Germany and CRE. You heard it here first, and you'll probably hear an "I told you so" in a few months as well.
Below, click the graphic to advance it, or you can click the play button at the bottom of the black box for "autoplay".

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