Moody's Loses Its Mind

A blog about business and economics.
July 23 2012 5:25 PM

Moody's Loses Its Mind, Decides Finland Is More Creditworthy Than Germany

In what I can only imagine was a fit of insanity, Moody's has decided to lower the outlook for Germany, the Netherlands, and Luxembourg and leave Finland—plucky little Finland—as the sole eurozone member with a stable triple-A rating. Why?

Well, they gave Germany a negative outlook because of "rising uncertainty regarding the outcome of the euro area debt crisis" and the "rising contingent liabilities" that the Germans are taking on as a result of this. But of course Finland is also affected by that. But Moody's says it's fine because of "its small and domestically oriented banking system, its limited exposure to, and therefore relative insulation from, the euro area in terms of trade, and its attempts to collateralise its euro area sovereign support together provide strong buffers which differentiate it from the other Aaas."

Advertisement

Try to sketch out a situation in which Germany is defaulting on its debts but Finland isn't because Finland has "collateral" from Spain.

Are they marching an army across the entirety of Germany and France to collect this debt? No. No way. I don't think there's any real credit risk around Finland, but unless something wild changes in the realm of geopolitics, Finland will always be slightly riskier than Germany due to the fact that the Russians might invade and conquer Finland. Is that likely? No. But it's way more likely than Finland coercing Spain and Italy into coughing up collateral in the context of a total meltdown of the eurozone. This is just a ludicrous read of the situation.

The actually interesting question in Europe is France, whose financial markets are being treated like a poor man's Germany but analytically look more like a rich man's Italy.



Matthew Yglesias is the executive editor of Vox and author of The Rent Is Too Damn High.

TODAY IN SLATE

Doublex

Crying Rape

False rape accusations exist, and they are a serious problem.

Scotland Is Just the Beginning. Expect More Political Earthquakes in Europe.

I Bought the Huge iPhone. I’m Already Thinking of Returning It.

The Music Industry Is Ignoring Some of the Best Black Women Singing R&B

How Will You Carry Around Your Huge New iPhone? Apple Pants!

Medical Examiner

The Most Terrifying Thing About Ebola 

The disease threatens humanity by preying on humanity.

Television

The Other Huxtable Effect

Thirty years ago, The Cosby Show gave us one of TV’s great feminists.

Lifetime Didn’t Find the Steubenville Rape Case Dramatic Enough. So They Added a Little Self-Immolation.

No, New York Times, Shonda Rhimes Is Not an “Angry Black Woman” 

Brow Beat
Sept. 19 2014 1:39 PM Shonda Rhimes Is Not an “Angry Black Woman,” New York Times. Neither Are Her Characters.
Behold
Sept. 19 2014 1:11 PM An Up-Close Look at the U.S.–Mexico Border
  News & Politics
Weigel
Sept. 19 2014 9:15 PM Chris Christie, Better Than Ever
  Business
Moneybox
Sept. 19 2014 6:35 PM Pabst Blue Ribbon is Being Sold to the Russians, Was So Over Anyway
  Life
Inside Higher Ed
Sept. 19 2014 1:34 PM Empty Seats, Fewer Donors? College football isn’t attracting the audience it used to.
  Double X
The XX Factor
Sept. 19 2014 3:07 PM Everything Is a "Women's Issue"
  Slate Plus
Slate Picks
Sept. 19 2014 12:00 PM What Happened at Slate This Week? The Slatest editor tells us to read well-informed skepticism, media criticism, and more.
  Arts
Brow Beat
Sept. 19 2014 4:48 PM You Should Be Listening to Sbtrkt
  Technology
Future Tense
Sept. 19 2014 5:03 PM White House Chief Information Officer Will Run U.S. Ebola Response
  Health & Science
Medical Examiner
Sept. 19 2014 5:09 PM Did America Get Fat by Drinking Diet Soda?   A high-profile study points the finger at artificial sweeteners.
  Sports
Sports Nut
Sept. 18 2014 11:42 AM Grandmaster Clash One of the most amazing feats in chess history just happened, and no one noticed.