Moody’s puts the negative outlook on Italy: Draghi’s failure to manage the Ukrainian crisis

Draghi is not the magician that is said around, not even for the rating agencies of which the world is a part. Global ratings agency Moody's cut Italy's outlook to negative from stable on Friday, weeks after the resignation of Prime Minister Mario Draghi rocked the country's political landscape. "Risks to Italy's credit profile have accumulated recently due to the economic impact of Russia's invasion of Ukraine and internal political developments, which could have significant credit implications," Moody's said. . The agency confirmed Italy's sovereign rating at Baa3. Standard & Poor's rating for Italy is BBB with stable outlook. Fitch's rating for Italy was last reported to BBB with a stable outlook. The DBRS rating for Italy is BBB (high) with stable prospects. In general, the rating is used by sovereign wealth funds, pension funds and other investors to assess Italy's creditworthiness, with a strong impact on the country's financing costs. This page contains the Italian public debt rating reported by the main rating agencies.

Here from Tradingeconomics the main quotes of the rating companies.

Now I think exactly like in the movie "The Big Bet", The Big Short "

Rating agencies work for money, and they would do anything for money. The cases of the past are innumerable. But I would like to focus your attention on three points:

• who are right for the fact that the Draghi government, on the occasion of the invasion of Ukraine, did not set up a serious energy – economic, – industrial policy. He limited himself to going on the one hand to the tow of the Commission and NATO, applying their trademark errors. Everything else was not a policy, but simply a set of bonuses in succession;
• in two months it will be necessary to decide whether to send Italian families to the ground by increasing their bills, as the IMF wants, sacrificing social stability, or whether to continue with bonuses;
• the whole rating problem would not exist if our debt were denominated in national currency. Japan has a debt of 260% of GDP and a rating of A….

In the end, the Draghi management failed even in what it should have done easily, managing relations with international finance. If the system is wrong, one man is not enough to make it work.

Moody's was forced to close its Moscow office. How will Russia survive?

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The Moody's article puts the negative outlook on Italy: Draghi's failure to manage the Ukraine crisis comes from ScenariEconomici.it .

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This is a machine translation of a post published on Scenari Economici at the URL https://scenarieconomici.it/moodys-mette-loutlook-negativo-allitalia-il-fallimento-di-draghi-nella-gestione-della-crisi-ucraina/ on Mon, 08 Aug 2022 07:00:31 +0000.