The euro plunged deeper into crisis last night as Greece’s credit rating was slashed to ‘junk’ status – just one notch above default – by another major agency.
David Cameron told European leaders to act immediately to prop up the ailing country amid fears that the crisis stalking the single currency will drag down Britain.
Credit rating agency Fitch yesterday indicated it expected the Greek government to default on its loans, cutting the country’s rating from B+ to CCC.
The move brought it in line with the other two of the ‘big three’ credit rating agencies, Moody’s and Standard & Poor’s, which downgraded the country’s bonds to a similar level last month.
Eurozone ministers have been locked in talks for weeks to decide who will bear the burden of the new 100billion euro handout for Greece, which will default on its loans unless it gets a fresh injection of cash.
In a statement, Fitch placed the blame on the EU and IMF. It said: ‘Today’s rating downgrade reflects the absence of a new, fully-funded and credible EU-IMF programme for Greece, coupled with … Greece’s weakening macroeconomic outlook.’
The developments came amid signs that the Italian economy – the EU’s third biggest – is also in grave danger because of spiralling debts.
Ireland’s government bonds were also relegated to ‘junk’ status this week, prompting fears that Britain will have to contribute to a second bailout of the UK’s crippled neighbour.
Taxpayers have already contributed £12.5billion to bail out Ireland, Greece and Portugal, of which £7billion went to the Irish.
Source and full story: Daily Mail, 14 July 2011
These are the same ratings agencies who gave mortgage-backed securities, mainly composed of sub-prime mortgages, a triple AAA rating, a rating that is normally only given to government securities. While not exclusively responsible for this crisis, they have played a major part in it.
So why should anyone care what Fitch, Moody's or Standard & Poor have to say, when it is clear that these organisations are either corrupt or inept?
I choose option no. 1 - corrupt.
The downgrade is all part of the deception - make the economic meltdown appear as if it has a basis in reality. as if Greeks somehow are 'bad actors' and therefore must be downgraded first and abandoned next.
A bunch of bs - if the Greeks created their own currency today to deal with their crisis, in less than a decade they would prosper beyond anyone's wildest imagination.