Skip to comments.Markets tumble after Fitch cuts Spain's ratings
Posted on 05/28/2010 12:01:50 PM PDT by mlocher
MADRID (Reuters) - Fitch Ratings cut Spain's credit ratings to AA+ from AAA on Friday, saying its economic recovery would be more muted than the government forecast, pushing world equities and the euro lower.
The downgrade follows a cut by another agency Standard and Poor's last month and heaps more pressure on the government, battling to reassure markets its fiscal, political and social woes will not end up in a Greek-style debt crisis.
Fitch said Spain's deleveraging of record-high levels of household and corporate debt and growing levels of government debt would drag on economic growth.
"The downgrade reflects Fitch's assessment that the process of adjustment to a lower level of private sector and external indebtedness will materially reduce the rate of growth of the Spanish economy over the medium-term," Fitch's analyst Brian Coulton said in a statement.
It kept its outlook stable.
The downgrade by Fitch set off a new round of selling in equities that were already lower. The euro fell as low as $1.2284, near a session low.
Europe's clumsy response to a Greek debt crisis and big deficits in other euro zone countries have unnerved markets over the past six weeks and raised doubts about the viability of the euro.
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Who’s on first...but I digress.
“The trouble with socialism is that eventually you run out of other people’s money.”
— Margaret Thatcher
Here’s food for thought.
The UK ?
I think it is a toss-up between Ireland and Portugal.
Definitely Portugal. They have loan payments that they simply cannot meet, and they will have to pay them before Ireland.
Portugal, then Italy or Spain, and eventually the UK. Somewhere between Spain and the UK, the Germans and the Dutch and possibly the French will remove themselves from the economic portion of the EU. And then the USA crashes, followed by the Asian economic zone. Oh the joy. Water, shelter, self-defense and food should be on everyone’s investment priority list.
You are right. I think of Ireland as Europe’s red headed step child and that is why I picked her next.