You're all idiots. Unless I am
7 Luglio Lug 2011 1434 07 luglio 2011

Jean Claude Trichet is playing with fire

So S&P can not announce that it may downgrade Italy during market hours, but Trichet can announce that he's going to change the rules and allow Portugese bonds to be repoed at the ECB, despite them being junk.

Ok, the rule change had already been announced for Greece and Ireland, but still, during market hours and during an interest rate Q&A session.

But if you're constantly changing the rules with regards to ratings and you want to use those ratings as the basis for Basel III, the methodology that is used to judge whether the banks are adequately capitalised, do not be surprised to see some seriously large and negative unintended consequences.

See #ECBcollateral on twitter.

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