[Al Jazeera] Greece has had its credit rating dropped by three notches, sparking strong condemnation from the debt-hit nation.
Moody's Investor Services downgraded its rating to B1 from Ba1 on Monday, and warned it may cut the rating again if the government's commitment to austerity fades.
Greece was saved from bankruptcy last May after accepting a $154bn bailout from the European Union and International Monetary Fund (IMF), on the condition that Athens imposed strict austerity measures.
Moody's said the Greek government's economic programme may not reduce debt and spark growth, and said there would be more difficult conditions when the bailout package ends in 2013.
"The risk of a post-2013 restructuring might lead the Greek authorities and investors to participate in a voluntary distressed exchange before that time,'' the agency said in a statement.
Monday's downgrade sent a ripple of concern around credit markets, raising the price of insuring Greek, Portuguese and Spanish debt against default and the risk premium on holding Greek bonds rather than benchmark German bunds.
The Greek goverment swiftly condemned the move, saying the downgrade was "completely unjustified" and "does not reflect an objective and balanced assessment" of the country's economic prospects.
"Ultimately, Moody's downgrading of Greece's debt reveals more about the misaligned incentives and the lack of accountability of credit rating agencies than the genuine state or prospects of the Greek economy,'' the finance ministry said.
It said that credit rating agencies had downgraded struggling countries like Greece heavily in past months in an attempt to make up for failing to predict the financial and debt crises.
"Having completely missed the build-up of risk that led to the global financial crisis in 2008, the rating agencies are now competing with each other to be the first to identify risks that will lead to the next crisis,'' the ministry said.
Greek national debt is still to exceed 150 per cent of GDP this year, while the economy is forecast to contract three per cent in 2011 as a whole.
Credit ratings agencies have been criticised in recent years for having presented a too-rosy view of the global economy in the run-up to the financial crisis, which led to the deepest recession since World War II.
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Posted by: Fred ||
03/08/2011 00:00 ||
Comments ||
Link ||
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#1
Wow, I didn't know that had a credit rating BELOW Greece!
Is Greece's credit rating like the Mendoza line in baseball?
Is our credit rating taking the same express elevator to the basement?
Posted by: Bill Clinton ||
03/08/2011 9:53 Comments ||
Top||
#2
Credit rating agencies played a big part in creating the current worldwide economic disaster by giving top credit ratings to utterly worthless paper.
Then deadbeats like Greece borrowed for all & then far more than they were good for.
#3
A rating of B1 is still too high. That means it's still in the middle of the pack. In reality, I wouldn't touch their debt for 10 cents on the dollar.
Posted by: Frozen Al ||
03/08/2011 12:47 Comments ||
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#4
Several years ago I read an essay on the credit crash that blamed, primarily, 3 things:
1) The CRA which opened the floodgates on bogus gov't insured mortgages (all in the NAME of helping the poor)
2) BASEL II - which moved accounting of the worth of assets from a mark to model basis to a mark to market method. This "vanished" billions in assets that had been used as collateral for loans. When the collateral "disappeared" the loans were called.
3) Most relevant to this, the credit rating agencies kept hanging AAA ratings on worthless derivatives etc.; then pulled the plug. The key question is this: In the essay George Soros was mentioned as a major player in the credit rating debacle. Anyone else hear this?
#6
The US Federal government is 4 years behind Greece and will reach Greece's current public debt of 145% of GDP in 2015. Sooner if state and local debt in included.
#7
BP, not sure what you mean by ~0. Are you saying that Basel II changed the reserve requirement to $0? That would certainly be a problem, but, that seems to be about the same as the model to market shift which lowered the value of the reserve (collateral).
The credit being driven below (way) risk was a factor of the Fannie/Freddy guarantee (wink, wink) that the gov't would insure all those bad loans aka no risk to the lender.
#8
ION WAFF > POSTER THREAD = IIUC proudly opined that NO WAY WILL THE US-NATO-EU ALLOW GREECE TO COLLAPSE BECAUSE GREECE, DESPITE ITS SEVERE ECON TRUBLES [including POOR CREDIT RATINGS + MUSLIM/ FOREIGN IMMIGRATION], IS NOW THE US-NATO-EU'S INDISPENDABLE MILITARY FORT IN THE "WILD WILD WEST/INJUN COUNTRY" KNOWN AS JASMINE-TROUBLED ARAB MIDDLE EAST + PERSIAN GULF = SE EUROPE + MEDITERRANEAN REGIONS.
The Vanguard + Bulwark between Europe + Arab-Muslim barbarian hordes, espec WILY DASTARDLY,
HELEN-STEALING TROY/TROJAN, USED-TO-BE-GREEK/GRECIAN, YOU-CALL-THAT-A-BIKINI-BABE-CALENDAR MUSLIM TURKEY [Greece-vs-Turkey Mil Forum Boyz].
Turkish Prime Minister Erdogan is running for re-election in June, and is hoping that Germany's large Turkish community can help him secure the votes he needs. But his request for electoral help from the German government has ruffled feathers.
This June, Erdogan wants to see ballot boxes placed in the Turkish Embassy and Turkish consulates in Germany. Germany's Interior Minister at the time agreed, at least in principle, to provide support, and tentatively promised police protection. Swedes, Iraqis and Australians are already able to vote in their embassies in Germany. The German government had previously rejected all requests from Turkish politicians -- out of fear of attacks.
The situation was not helped by a campaign speech Erdogan delivered in Germany 27 Feb: He said that Turkish, not German, must be the first language of the children of Turkish parents. "You are my citizens!" he told the crowd.
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#1
Remember all the Mexicans in the US demonstrations waving the Mexican flag and waving poster signs in THEIR language and not in English?
Multi-Cultural is good... cant have enough of it. California has taco stands all over the place.
The stupid dont survive long. The purpose of anything is always itself. Have a Taco.
....have another one, put some chipotle sauce on it. F*** the hotdog and Cinco de Mayo.
A multi-volume chronology and reference guide set detailing three years of the Mexican Drug War between 2010 and 2012.
Rantburg.com and borderlandbeat.com correspondent and author Chris Covert presents his first non-fiction work detailing
the drug and gang related violence in Mexico.
Chris gives us Mexican press dispatches of drug and gang war violence
over three years, presented in a multi volume set intended to chronicle the death, violence and mayhem which has
dominated Mexico for six years.
Rantburg was assembled from recycled algorithms in the United States of America. No
trees were destroyed in the production of this weblog. We did hurt some, though. Sorry.
[Al Jazeera] Greece has had its credit rating dropped by three notches, sparking strong condemnation from the debt-hit nation.
