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Moody’s, Fitch Say Greece Certain To Default

From a mixed emotioned Associated Press:

Moody’s warns Greek default virtually 100 percent

AP – July 25, 2011

ATHENS, Greece (AP) — Moody’s downgraded Greece’s bond ratings by a further three notches Monday and warned that it is almost inevitable the country will be considered to be in default following last week’s new bailout package.

The agency said the new EU package of measures implies "substantial" losses for private creditors. As a result, it cut its rating on Greece by three notches to Ca — one above what it considers a default rating.

Though Moody’s said a Greek debt default is "virtually certain," it noted that the new measures will increase the likelihood that Greece will be able to stabilize and eventually reduce its overall debt burden

Who knew that Barack Obama was really Greek? But notice that all of a sudden ‘default’ isn’t such a bad thing, after all. It doesn’t mean the end of the world as we know it.

In fact, last week we learned that Germany and France would allow Greece to defaultas an important part of their ‘bailout plan.’

Eurozone countries and the International Monetary Fund last week agreed to give Greece a second bailout worth euro109 billion ($155 billion), on top of the euro110 billion granted in rescue loans a year ago.

If all goes to plan, banks and other private investors will contribute some euro50 billion ($71 billion) to the rescue package until 2014 by either rolling over Greek bonds that they hold, swapping them for new ones with lower interest rates or selling the bonds back to Greece at a low price.

"The support package incorporates the participation of private sector holders of Greek debt, who are now virtually certain to incur credit losses," Moody’s said in a statement. "If and when the debt exchanges occur, Moody’s would define this as a default by the Greek government on its public debt."

So this is actually a planned default. Where is the outrage?How is it possible that Europe has not collapsed in an economic Armageddon?

And, by the way, this is a real default, not the pretend default that we are facing in the US.

Despite Greece’s new package, which was more comprehensive than many in the markets had predicted, Moody’s said it’s going to take many years of hard graft for Greece to get complete control of its debts.

Luckily, Greece is good at ‘graft.’

"Greece will still face medium-term solvency challenges — its stock of debt will still be well in excess of 100 percent of GDP for many years and it will still face very significant implementation risks to fiscal and economic reform," Moody’s said.

On Friday, ratings agency Fitch also said it would rule Greece in default

Note that Reuters buries this minor detail.

Still, if we were more conspiratorially minded we would wonder if Moody’s and Fitch didn’t announce their intentions in order to try to drive down the world markets and put further pressure on the Republicans in Congress.

After all, how can we say that the supposed tremors going through the world markets are caused by the lack of a US debt ceiling deal and not Greece defaulting — and defaulting for real?

This article was posted by Steve on Monday, July 25th, 2011. Comments are currently closed.

9 Responses to “Moody’s, Fitch Say Greece Certain To Default”

  1. Papa Louie says:

    “As a result, it cut its rating on Greece by three notches to Ca — one above what it considers a default rating.”

    At one notch above default, does “Ca” stand for California?

  2. proreason says:

    What a dilemma for the marxist in chief.

    On the one hand, default won’t end his reign.

    On the other hand, what he has worked for all his life might be an illusion. As a consolatiion, if a debt default can’t topple the United States, then isn’t that just an opportunity to create even more spectacular crises?

  3. tranquil.night says:

    “Still, if we were more conspiratorially minded we would wonder if Moody’s and Fitch didn’t announce their intentions in order to try to drive down the world markets and put further pressure on the Republicans in Congress.”

    Indeed, but this is in fact the greatest sign yet that we cannot kick the can down the road lest it go right off the cliff.

    The latest from Erickson:

    He’s convinced Shady Compromise #6 will essentially commit us to a downgrade: http://www.redstate.com/erick/2011/07/25/speaker-boehner-commits-us-to-a-credit-downgrade/

    It needs to materialize as legislation for Moody’s to score. I’m with him though, the new spending cut commission reeks of turd.

    Meanwhile the House Republicans are looking for absolution and energy, Erik cannot give them the first, but delivers plenty of the second: http://www.redstate.com/erick/2011/07/25/the-absolution-i-cannot-give/

    Maybe we can offer some sense of Absolution.

    History dictates that the Ruling Class cannot be trusted, not that Government is evil but that they take Government hostage to avoid the Democratic process and pursue unpopular and sometimes (often) borderline criminal interests. The “Democrats” in the Senate and Executive have wasted every opportunity to openly present the American People with their ideas. Those which they have, have been rejected. They are quickly running out of time to come up with something that genuinely reflects the American People’s will, otherwise the only realistic plan to keep this show rolling is Cut, Cap, and Balance and emergency stop gaps with cuts. If the “Democrats” continue their path of deceit and tyranny, which has been demonstrated over these past couple of years but especially the past few weeks, then the cost is theirs to own, which has also been and will be demonstrated.

    Therefore it is statistically likely that the offer we are about to be presented with is not Victory, but yet another Trojan Horse which will unleash all the horrors of the corruptive, destructive virus overwhelming our operating system until it collapses. So there’s your absolution. We’re facing off against our worst nightmares. Hold the line and we will stand with you.

    • proreason says:

      This is the “plan” I’ve expected all along, and it sounds like it will be about as successful as I expected.

      It would be better if they killed the unconstitutional super-congress and simply cut $100B this year and legislate that the same amount be cut in the next 9 years by axing (not assigning the axe to future congresses but axing programs today) another $140B per year. Then it would be better than nothing.

      The super-congress is grounds to impeach Boner and Mitchell. If we can’t get the marxist in chief, maybe we can get his henchmen.

    • Rusty Shackleford says:

      Listening to Rush today, this BS about appointing a 12 member board to decide what gets cut only makes it obvious that they don’t want their (re-election) fingerprints on it. When it goes bad, they can point fingers at the members who were unable to come to any agreement. This is when I’d love to be a member of congress and truly not care about re-election. I would intentionally annoy every single other person on the board by calling them out on their lies and their other bad behavior. I would become infinitely unpopular with my fellow board members but I’d make my points.

      But creating another “sub-task” group to do the hard work? Oh come on!

  4. Reality Bytes says:

    So, what happens to Citi & Goldman when Greece defaults on the debt they sold them? Another stimulii. Remember; the left went bonkers accusing both firms of preditory lending practices – not on poor hapless simpletons, but on a freakin’ country, GREECE! Come to think of it, maybe it is the same thing.

    What’s the over/under on how much Obama puts up to keep those two from defaulting. Hint, It’ll be deja vu all over again.

    I may not be that smart, but next time this happens, what do you think a bunch of as Obama calls them “Wall Street Speculators” (code for you know who) would pay for a Goldman in default?

    • proreason says:

      “So, what happens to Citi & Goldman when Greece defaults on the debt they sold them?”


      Nuthin will happen. That’s why they bought Obamy in the first place.

      As you probably know, GS has come out on top in 14 of 14 of the last financial “crises”. Maybe they’re lucky. Probably not.

    • tranquil.night says:

      I believe “savvy” is the term Obama used, Mr. Sajak (out of the closet redisttibutionist critic, btw!) Let’s play some more Wheel of Virtual Fortune.

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