S&P's Moritz Kraemer: Europe's AAA-rated Mr Scissorhands

Mon Feb 13, 2012 4:17am EST
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By Marc Jones

FRANKFURT (Reuters) - On January 13, Standard & Poor's Ratings Services cut the credit ratings of nine euro zone countries, stripping France and Austria of their triple-A status and triggering new concerns about the region's financial health.

Since then, the lead analyst in the downgrades, who long has toiled in obscurity as an economist, has gone largely quiet as he monitors Europe's next move from a Frankfurt office tower.

Some policymakers have a nickname for Moritz Kraemer: "Mr Scissorhands."

Since 2007, Kraemer and a team of little-known economists at S&P's European sovereign debt team have downgraded euro zone countries 36 times.

Ratings downgrades - a judgment of the creditworthiness of a country - signal to the world that a sovereign doesn't have full control of its finances and they make it more costly for countries to borrow money.

The January downgrades once again thrust S&P and rivals Moody's Investors Service and Fitch Ratings into the limelight. The ratings agencies were heavily criticized after the 2008 financial crisis. A 2011 U.S. Senate investigation reported that ratings agencies downgraded risky mortgage bonds in 2007 having just months before deemed the securities to be comparable to Treasury bills. The inquiry also alleged that ratings agencies worried they would lose fees if they gave lower grades for mortgage bonds.

In announcing the downgrade of much of Europe, Kraemer, who declined comment, defended the ratings cuts and criticized Europe's leaders for not doing enough to address the region's debt crisis. "The policy initiatives taken by European policymakers in recent weeks may be insufficient to fully address ongoing systemic stresses in the euro zone," Kraemer said at the time.

Colleagues say that is typical of Kraemer, who speaks English, German, French and Spanish.   Continued...

<p>Workers maintain the huge Euro logo next to the headquarters of the European Central Bank (ECB) in Frankfurt, December 6, 2011. REUTERS/Ralph Orlowski</p>