Hair of the Dog

Fitch Ratings is throwing Europe a huge curve this morning - it says that any rollover of existing Greek debt would be deemed a default and the country's credit rating would be downgraded accordingly... At first blush I'm thinking that's a legitimate move, Fitch is just assessing the situation for what it truly is - if Greece doesn't have the wherewithal to pay its debts when due, regardless of whether its creditors are kind enough to take on a new term, it's in default...

At second blush, however, it's a bit more than just calling it like they see it... In fact Fitch is in essence putting pressure on Europe to go all in with bailout money - i.e., if the EU will commit to an entire taxpayer funded "solution", Greece's rating will remain above default status... I bet they even raise it...

Fitch also issued similar comments with regard to the U.S.; threatening a default rating if the debt ceiling isn't raised accordingly... I.e., if we don't extend our credit limit so that we can borrow more to pay for our existing debt they'll lower our credit rating ("we" being the taxpayers)...

Now what if we were talking your personal finances? Of course for one; you'd be miserable... And two; it'd never happen - by then your credit rating would be a nightmare and no reputable lender would touch you...

Bottom line, when it comes to sovereign debt (us taxpayers' collectively)the credit agencies, like the Fed, like the Treasury and like your run-of-the-mill politician, believe they can actually fix things with a lot of "hair of the dog that bit ya