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Stephen Pope is the founder and Managing
Partner of spotlightideas.

He has worked in the international capital...



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Fox Business News features Stephen Pope & Spotlight Ideas

Friday January 13th 2012

This afternoon, Stephen Pope, Managing Partner of Spotlight Ideas was interviewed by telephone by Cheryl Casone of Fox Business News. This was at 17:00 GMT 12:00 Eastern

This followed a press release he made in the afternoon...please see below:

SPOTLIGHT IDEAS PRESS RELEASE JANUARY 13 2012   16:15 LONDON


The rating agency, Standard & Poor's has served notice on lackadaisical European governments that it is about to announce downgrades in the credit ratings of France and a number of European sovereigns as early as Friday. we expect this to happen at 15:00 Eastern. 
 
It has been suggested that a notice from S&P has been distributed to EZ governments with the prospect that an an announcement may well be imminent. News sources suggest that S&P is refusing to comment. However, the French government confirmed it had received S&P's notification and yet was aggressive in defending the state of French finances.
 
At the end of 2011 S&P took the step to place 15 of the 17 EZ countries on watch for possible downgrade. At long last an agency placed the spotlight on the long standing systemic stresses that are pressuring the single currency region's credit standing. It doen't matter if Germany can rise above the economic malaise...what S&P have recognised is that the debt debacle has dragged on for so long that the EZ is deeply mired in a "Joint & Several" solvency swamp.
 
Any action that S&P take to downgrade nations will not be before time and the risk that this day of reckoning is upon us has pressed the Euro to new lows against the Dollar. We are heading for a tilt at EURUSD 1.2000.  The rate   dropped as low as $1.2662, down from $1.2814 late Thursday.
 
What is needed is action on the arrogance of France that has postured and posed throughout 2011 in total denial of 

(1) the balance sheet time bomb its banks faced and

(2) the dire state of the national finances. Debt to GDP is 82% and the Deficit to GDP 7%. Unemployment is stuck at 9.8% and the social welfare budget that tracks GDP growth was in deficit by EUR10Bn in 2008 and by EUR20Bn in 2009.

President Sarkozy has spent too much time acting like a strong man of Europe when in fact he was just out on the campaign trail. Why Merkel bothers with Paris - Berlin charades is really only explained by the fact that she uses Sarkozy as veil to deny any charge of German hegemony!
 
 
A downgrade of France's rating will be a severe blow to the EFSF....it has always been too small and has no mechanism to be leveraged. No foreign party with any sense will commit to that vacuous vehicle. if not when it was a "solid AAA" who will now?
 
The downgrades would be a blow to Italy, which had enjoyed a decline in its bond yields in recent sessions. The EZ's 3rd largest economy is scheduled to sell €440Bn ($563.8Bn) of bonds and treasury bills in 2012 and investors are expected to demand higher yields for the risk of holding a lower-rated security.
 
The S&P's negative ratings watch included top-rated Germany, France, the Netherlands, Austria, Finland and Luxembourg—countries that S&P said could lose their premier credit status if European policy makers continue stumbling in efforts to tackle the immediate market confidence crisis. Germany will not be affected for now although it too has serious state pension obligations that are becoming increasingly unfunded year after year.
 
 
Steve 

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