Value Investing World

Saturday, January 14, 2012

El-Erian: Do Friday's European Downgrades Matter?

The chatter on Friday's downgrades of European sovereign ratings debt is all over the place - from those dismissing it as old news (especially given that S&P warned back on December 5th) to those viewing it as part of a larger and consequential transformation of the international monetary system.

What follows is an attempt to provide a guide to the multi-faceted implications.

It focuses on three types of consequences: (i) those that are unambiguous and already reflected, albeit not fully, in market valuations; (ii) those that are less well understood but will become clearer in the next few weeks; and (iii) those that are consequential but where the analytics are still largely unknown at present.
Joe at 1/14/2012
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