Posted on 12/05/2011 1:53:56 PM PST by SeekAndFind
Ahead of a planned summit of European Union leaders, the credit rating agency Standard & Poor’s has put all 17 Euro nations on review for a credit downgrade, which means France and Germany could lose the pristine AAA ratings they presently enjoy, Bloomberg News is reporting.
The euro area’s six AAA rated countries are among the nations to be placed on a negative outlook pending the result of a summit of European Union leaders on Dec. 9, the people said today on condition of anonymity because the decision has yet to be announced. The euro reversed its gains and U.S. Treasuries rose after the Financial Times reported earlier that the credit-ranking firm planned to reduce six AAA outlooks, without citing the source of the information. John Piecuch, a spokesman for S&P in New York, had no comment.
The downgrade warnings come as German Chancellor Angela Merkeland French President Nicolas Sarkozy push for a rewrite of the EU’s governing rules to tighten economic cooperation in a demonstration of unity on ending the debt crisis. With the fate of the currency shared by the 17 euro countries at risk, Merkel and Sarkozy presented a common platform for a Dec. 8-9 summit of EU leaders in Brussels that aims to halt the crisis now in its third year.
“Negative news is going to continue to spur rallies in the Treasury markets, at least until the ECB steps in to end this mess once and for all,” said Guy LeBas, chief fixed-income strategist at Janney Montgomery Scott LLC in Philadelphia. “S&P can serve to spook the markets, but I don’t think we’ll see any fresh policy action based solely on a ratings agency’s opinion.”
Frankly, as was the case this summer when S&P put the United States on downgrade review (prior to actually downgrading the nation), the S&P rating of these Euro nations matters far less than the actual fiscal state of affairs. The European debt crisis is nothing new — and, as with the United States’s debt crisis, the solutions are obvious, but difficult. What’s called for is a wholesale reform of the various member nations’ entitlement states.
obviously they need to nationalize S&P....
Neither Europe nor the United States will give up Socialism. The majority are on the dole and will not vote themselves off.
Polarity, between household debt contraction (which is govt. resistance), and a real psychopathy of the Federal Governments (euro also), RICO players, and the cast of SO CALLED ‘banking”.
“resistance” (consumer contraction) is forcing downward REAL market pressure, govt.-RICO psychopathy is maintaining high (very high in comparison) pensions and salaries compensations.
This IS a psychopathy, govt-RICO players have no sympathy, but lip-service, to the resulting unemployed. And many who are employed are being thown bones compared to govt.-RICO compensation standards.
Watch the REAL employment numbers (which they tried to fake last week)
Look up the word “Arbeitsziehungslager”, and the momentum that brought this about.
S&P is a creature of a magazine publisher. It fills the "news hole" so their flyers don't look to be little more than weekend advertisers.
Oh, yes there is. You're looking at it from the standpoint of an individual investor who doesn't particularly care what happens in the EU. That's perfectly justified, by the way.
The news is that they're warning Merkel (and the German people) that they're on to her scam. Guaranteeing the debts of the PIIGS, even though it will result in increased German political power, will seriously weaken Germany economically.
It's like Texas deciding to guarantee the deficits of New York and California. No matter how strict the Texans get, the coastal libs will only be encouraged to spend more. This throws an interesting new monkeywrench into the process.
And, yes, look for much huffing from Brussels about silencing the ratings companies -- all for the common good, of course.
No problem,
print more money !
woo-hooo !
US debt will also be downgraded again soon.
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