Here we go again. The Eurozone lurches from one crisis to another like a bad soap opera. Discredited rating agency Standard and Poor’s (abysmal record on subprime mortgages in US) has followed up the downgrade of France yesterday (held its AAA rating since 1975) by lowering the ratings of a number of Eurozone countries. The downgrade of so many will have a serious dent in the confidence in the Euro in general. Personally can’t wait to see the reaction in the markets on Monday. 😉

Italy saw its long-term rating drop by two notches, along with Spain, Portugal and Cyprus. Austria, Malta, Slovakia, and Slovenia had their ratings lowered by one notch.

There was no change for Germany, the Netherlands, Ireland, Belgium, Estonia, Finland or Luxembourg.

Then the in-fighting started:

The move triggered a backlash from European politicians and led to calls for Britain to be downgraded too.
French officials have said that Britain is more deserving of a downgrade than France. A senior German politician joined their calls on Friday night. Michael Fuchs, a member of the governing Christian Democrats, said that Standard and Poor’s was “playing politics”.

“If the agency downgrades France, it should also downgrade Britain in order to be consistent,” he said. Wolfgang Schaeuble, the German finance minister, played down the downgrades. “We should not overestimate the ratings agencies in their assessments” he said.

As all this goes on, Greece slips by under the radar to an extent. Talks are ongoing about its debts and a possibility of an involuntary loss for bondholders which means when you cut through the bullshit a default which would trigger CDSs. Many US banks are exposed to Greece through these credit default swaps.

Source: Irish Independent