Posted on 10/25/2011, 5:08:38 AM by bruinbirdman
Standard & Poor's (S&P) is to warn that a double-dip recession in Europe would imperil France's AAA rating and set off a string of downgrades across Southern Europe, undermining the EU's debt crisis strategy.
The EU-IMF bail-out machinery would require an extra €250bn or more to stabilize eurozone debt markets, forcing Germany and EU's creditor states to vastly increase rescue commitments.
The report, due Friday, said a double-dip recession would lead to a downgrade of "one or two notches" for France, Spain, Italy, Ireland and Portugal, both because of tumbling tax revenues and the extra costs of propping up banks.
The scenario looks increasingly likely after Germany slashed its growth forecast from 1.8pc to 1pc for 2012. Greece and Portugal are contracting at alarming speeds. Italy and Spain are already in industrial recession.
"Confidence surveys have fallen off a cliff over past three months," said Marchel Alexandrovich from Jefferies Fixed Income. "The lagged effects of fiscal and monetary tightening are still working their way through the system so it looks highly likely that we are in recession now."
Drastic loan shrinkage as banks rush to meet new capital requirements before next June risk intensifying the downturn, and may lead to a credit crunch. Alberto Gallo from RBS said deleveraging by Europe's lenders could reach €5.1 trillion over coming years, partly through asset sales and run-offs.
The S&P warning comes at an explosive moment as German lawmakers balk at French demands for yet bigger bail-out pledges. "The French want more money from Germany than we are prepared to take on our shoulders," said Otto Fricke, Bundestag leader of the Free Demoracts (FDP) in Chancellor Angela Merkel's coalition.
A French-led group of states want a full mobilization of the European Central Bank (ECB) to back-stop the system and
(Excerpt) Read more at telegraph.co.uk ...
This is ridiculous. Every 2 weeks the EU announces it needs another $150 Billion, $300 Billion.... $1.2 Trillion....
Where the hell is all this money supposed to be coming from?
I guess from the USA, Germany, and the UK?
If only there were a final price tag for Socialism, whereupon the problem would be “solved.” Yet no point exists... it’s just a descent into oblivion.
Printing presses are relatively cheap.
God, I miss Ronald Reagan.
There are still countries to be forced into EUrotopia.
And plenty more private property to confiscate.
yitbos
I read the title wrong and thought, “too bad about the emu recession.”
Maybe I should call it a night.
The welfare state is out of control Very few countries will escape this but there will be some islands of calm.
Countries that can feed themselves, and have sufficient domestic energy supplies should be able to weather the storm. The ironic part of this is that, if the federal government would get out of the way, the US would be in this category. Instead of subsidizing underwater homeowners, the federal government should simply take the shackles off the oil and gas industry. Let them drill everywhere. Announcing this policy, and the subsequent gold rush to drill, would lower the price of energy immediately. Lower energy prices would lower inflation and speed growth. It is still not too late, although Obama won't do it.
Ping.
Pritchard had to fill some content space, apparently. Usually, he's considerably more interesting.
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