Posted on 01/13/2012 2:25:57 PM PST by SeekAndFind
Standard & Poor's has officially cut the long-term credit rating of France and eight other Eurozone nations.
Italy, Portugal, Cyprus, and Spain saw two notch downgrades, while Austria, France, Malta, Slovakia, and Slovenia were dropped one level.
The ratings agency reiterated its ratings on Belgium, Estonia, Finland, Germany, Ireland, Luxembourg, and the Netherlands.
Standard & Poor's has taken all 16 nations off of CreditWatch, which indicates a coming adjustment. However, the company has left 14 of the countries, including Italy and France, on negative outlook. Slovakia and Germany were the only two to move to stable outlooks.
The move by S&P ultimately stripped two countries, France and Austria, of cherished AAA ratings. Today, only four nations — Germany, Finand, the Netherlands and Luxembourg — maintain AAA status.
France's decline, from AAA to AA+ also substantially endangers the credit rating of the European Financial Stability Facility.
Whispers of the downgrades today sent the euro on a race lower, where it touched a 16-month low against the dollar. The currency is currently down more than 1.1% to $1.2675.
Full announcement:
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In our view, the policy initiatives taken by European policymakers in recent weeks may be insufficient to fully address ongoing systemic stresses in the eurozone.
We are lowering our long-term ratings on nine eurozone sovereigns and affirming the ratings on seven.
The outlooks on our ratings on all but two of the 16 eurozone sovereigns are negative. The ratings on all 16 sovereigns have been removed from CreditWatch, where they were placed with negative implications on Dec. 5, 2011 (except for Cyprus, which was first placed on CreditWatch on Aug. 12, 2011).
(Excerpt) Read more at businessinsider.com ...
Although France is generally regarded as one of Europe’s stronger economies, the loss of its AAA rating would be devastating to European efforts to build a firewall that would prevent contagion from spreading through the EU banking system.
But France also has bigger problems than just its credit rating. Fitch recently said France was the AAA country with the most exposure to Europe’s debt crisis.
In ten years, France’s exports have fallen from 55% of Germany’s exports to barely 40%. Labor productivity has fallen three times in the last four years.
France’s gross public debt amounts to some €1.7 trillion ($2.3 trillion), or 87.4% of GDP. That’s the highest ratio of debt-to-GDP of any AAA-rated country in the euro area.
And its government is doing little to curb its deficit.
France passed its last balanced budget in 1974.
With growth slowing, it is already going to have trouble adhering to EU rules to bring its budget deficit under 3% by 2013.
High costs of employing workers makes doing business expensive — particularly in comparison to neighboring Germany.
Where German employers pay 29% of gross wages in taxes, French employers pay as much as 49%. A 35-hour work week also makes employees expensive.
And the Democrats want the USA to be more like this??
However... and get a load of this...
Germany’s outlook was raised to AAA/Stable from AAA/Negative.
However... and get a load of this...
Germany’s outlook was raised to AAA/Stable from AAA/Negative.
Hmmm, this can’t be good for the market.
Because of the internal politics of Germany, which have tied Merkel’s hands. She can no longer pour the fortunes of Germany down the rat hole created by the French.
So now they’ll pay lower yields...
like we had after we were downgraded?
Monday will be a hoot.
I still want to know where the ECB got the money to loan out so banks could make those recent Spanish and Italian bonds purchases....
What about Switzerland? Don’t they still have a AAA status?
“Germany, Finland, the Netherlands and Luxembourg”
Sweden, Norway, Switzerland, UK?
re: So now they’ll pay lower yields...
like we had after we were downgraded?
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Nope. I don’t think the Eurozone is perceived as being like the USA.
In this slow motion train wreck the locomotive just hit another tree, a big one. But the train still has a lot of momentum and it’s going down hill so the end is nowhere near.
” Monday will be a hoot. “
Note that this was released late in the day on Friday — on Sunday, some ECB mucky-muck will announce that they’ve got a brand-new foolproof ‘plan’ (without details) and the Dow will go up 200 points on Monday....
Don’tcha just hate reruns???
Article is poorly researched.
Triple A worldwide:
Australia, Canada, Denmark, Finland, Germany, Hong Kong, Liechtenstein, Luxembourg, Netherlands, Norway, Sweden, Switzerland, United Kingdom
Germany - 3.6 trillion
United Kingdom - 2.4 trillion
Canada - 1.7 trillion
Australia - 1.5 trillion
Netherlands - .8 trillion
Switzerland - .6 trillion
Sweden - .5 trillion
Norway - .5 trillion
Denmark - .3 trillion
Finland - .2 trillion
Hong Kong - .2 trillion
Luxembourg - .06 trillion
Liechtenstein - .005 trillion
Total economy - 12.365 trillion.
So you’re still looking at a total economy of about 3/4ths that of the US. Look for the Franc, CDN, AUD, and the Pound?! to appreciate quite a bit over the next few weeks.
Real questions here - Germany and the UK?
So now Germany can justify leaving the Euro, "to help those less fortunate". Germany goes back to the Dmark, or becomes part of a "N Euro", and the PIIS can use a lower Euro to struggle along.
Whatcha think?
We pay lower yields because the Federal Reserve gives the Treasury money for free! They just print up some more.
Where we will run into a problem (soon) is when the rest of the world decides they don't want our dollars. Imagine going go to buy something and the clerk says sorry we don't accept US dollars here. Now what are you going to do? happily OPEC is still accepting dollars for oil, that is the only thing keeping us afloat.
Nine European Nations Downgraded by S&P:
JANUARY 11 Greece so poor families are abandoning their children
JANUARY 12 - Greece's unemployment rate jumped to 18.2%
here in the USA 15.227 trillion and counting
Just a little reminder debt(spending) kills nations
What about Switzerland? Don’t they still have a AAA status?
“Germany, Finland, the Netherlands and Luxembourg”
Sweden, Norway, Switzerland, UK?
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This only pertains to countries which use the Euro as currency. I presume the Swiss, Swedes, the Brits and Norway all have AAA status (I wonder whether the UK will maintain that status over the coming year, however).
Basically the ‘triple A’ club has been halved, with France, Spain and Italy all dropping out.
I also don’t like the prospects of some of them.
Canada - 84.0
Germany - 84.0
UK - 75.5
Norway - 55.4
Swiss - 54.5
Finland - 48.3
Denmark - 43.7
Sweden - 39.7
Austral - 26.6
Next to fall - Germany, Canada, UK. All are quite highly indebted.
Germany - 18 percent deficit FY 2011
Canada - 17 percent deficit FY 2011
UK - 25 percent deficit FY 2011 (Expenses/Revenue)
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