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Is The PIIGS Moment Of Fracking Approaching? S&P Joins Sovereign Risk Brigade, Downgrades Greece To BBB+
More bad news for a troubled Greece. And all this happening even as finance minister George Papaconstantinou says that Greece "is not banking and not operating under the assumption" that the Hellenic country will be bailed out by its Eurozone neighbors.
The minister has certainly read the Dick Fuld script: in an interview with the FT, he said "we're operating on the firm belief that we need ourselves to do whatever it takes to bring down the deficit," he said, and noted that Greece has a "very clear determination" to deal with its budget deficit, which is worth about 12.7% of gross domestic product, and a debt of over 109% of GDP.
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I love the smell of "bailout" in the morning.
The question seems to be: are the rating agencies pre-emptively doing their job, or are they just covering their rear before a looming crash?
They are doing whatever the government tells them to do, like always...
Beauty school dropout,
No graduation day for you.
Beauty school dropout,
Missed your midterms and flunked shampoo!
Well at least you could have taken time, to wash and clean
your clothes up,
After spending all that dough to have the doctor fix your nose
up!
Baby get moving (Baby get movin),
Why keep your feeble hopes alive?
What are you proving (What are you provin)?
You've got the dream but not the drive.
From "Greece". Oh, wait. Sorry. "Grease".
"Greece has a "very clear determination" to deal with its budget deficit"
ROFLMAO. I would say that it's a bit late for that. The compound debt trap has already snapped shut and will drag Greece kicking and screaming into the jaws of deflationary depression.
The S&P Ratings Motto: Better Late than Never.
Actually its :'Tweak the model not the client.'
I don't know this Dick Fold, but grease burn my shorts once. Very painful.
If there is fiat monetary system there is room for abuse, deficits, inflation, fractional reserve lending…
Help dismantle the abomination of today`s governments and gain our freedom back!
Please note that EU members using the euro are not sovereign in their own currency. Countries not sovereign in their own currency of issue, or who take on debt denominated in other currencies, can become insolvent and default on their debt. Countries that are sovereign providers of a nonconvertible floating fx currency of issue cannot become insolvent or default on their own debt, because they issue currency without financial constraint, unless such constraints are voluntarily adopted. Such governments do not need to tax or borrow to spend. There are real constraints, however. If nominal aggregate demand exceeds real capacity to produce goods and services for purchase, inflation will result. In addition, floating rates correct for currency imbalances. But if anyone thinks that the US dollar is going to zero, I'll personally come by their place and take their dollars off their hands.
I concur.
In the long run people will need America`s agriculural production and as much dollars just to get it.
Down with the petro-dollar!
Finally some non-stupid commentary on the USD and EUR. This non-sovereign issue is a huge flaw in the design of the euro and is going to prove the huge fallacy of optimal currency zones once and for all.
It is impossible for a multi-country alliance to meet all the criteria required for a currency zone to work.
You think that's funny wait to you see what happens when Germany defaults!
LOLZ!
-MobBarles
Demographics is destiny. An inverted population pyramid coupled to a welfare state is a financial death sentence. There are insufficient numbers of young, working people in Greece to finance the welfare state supporting retirees. Any attempt to do so would require tax rates so high that nobody will bother to work. Greece is screwed. This is payback for adopting Malthusian social policy and socialist economics.
Next up:
Spain
Italy
Most of Eastern Europe
Japan
Iran
China (circa 2030, as a result of the one-child policy)
Thank God for Hispanic immigration into America or we would be in the same boat.
I concur, but I still like living in Bulgaria as long as I can evade taxes as I do.
I doubt this has much to do with the present round of recession/financial/debt crisis. Ireland's demographics are pretty good, but it's among the weakest of the PIGIS. Germany's demographics are not so great, but it has one of the lower Eurozone default risks.
Rather than reading from Dick Fuld's script, I would love to see the minister look squarely into the camera and say, "EU central bank: Go Fuck Yourselves!" (of course, doing this after you've bought loads of CDSs that pay out if Greece defaults and the Euro shits itself. See, these things always work out).
I bet Greece defaults at the closing bell on Christmas eve, so it can be a carefully timed"non-event" just like Dubai. Traders and computer algorithms will come back after holidays and trade like nothing ever happened.
I'm not really competent to talk about this, but since it may be important and no-one else here has said it I'll just throw it on the table.
Apparently there are hidden depths to the Greece situation. Of the four propositions
1) The EU is forbidden to support its member states' deficits
2) The EU cannot support its member states' deficits
3) The EU is not supporting its member states' deficits
4) The EU will not support its member states' deficits
, 1) may be true on some level, 4) is possible, but 2) and 3) are false:
http://www.timesonline.co.uk/tol/comment/columnists/anatole_kaletsky/art...
http://www.independent.ie/opinion/columnists/brendan-keenan/brendan-keen...
http://www.guardian.co.uk/business/feedarticle/8859895
More of the same, from the BBC:
http://www.bbc.co.uk/blogs/thereporters/stephanieflanders/2009/12/exit_c...
There's too much of interest in the four articles to provide quotes from them, but I'll just repeat this from the Reuters(-via-Guardian) article:
"Replacement could prove virtually impossible in financial markets and could force the ECB to shape its collateral rules to keep Greek [sovereign] debt eligible."