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Moody’s Now Rates Greece Below Egypt

From an unfazed Reuters:

Two men ride their bicycles in front of Bank of Greece in central Athens March 7, 2011.

Moody’s downgrade tips Greece closer to brink

By Angeliki Koutantou And William James Mon Mar 7, 2011

ATHENS/LONDON (Reuters) – Moody’s slashed Greece’s credit rating by three notches on Monday due to an increased default risk, raising the specter that the distressed euro zone sovereign may have to restructure its debt, perhaps before 2013.

The move increased pressure on euro zone leaders to ease repayment terms on bailout loans to Athens, just as Germany and its allies seem to have turned their backs on more radical steps to help it reduce its debt through bond purchases or buy-backs.

Notice how this downgrade only puts pressure on Germany and other countries to be more generous to Greece. Not for Greece to be more fiscally responsible — and carry out its promised austerity measures.

Moody’s Investors Service downgraded Greek debt to B1 from Ba1 — lower than Egypt — and said it may cut further, drawing an indignant protest from the Greek Finance Ministry.

"The likelihood of a default or distressed exchange has risen since its last downgrade of the Greek government debt rating in June 2010," Moody’s said in a statement.

"Lower than Egypt." – Which, for some reason, makes us wonder what Wisconsin’s debt rating is at the moment. And note that things have only gotten worse in Greece over the last year.

The downgrade sent a ripple of anxiety 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.

Portuguese government bond yields hit a euro lifetime high of 7.65 percent, heightening pressure on Lisbon to seek an EU/IMF bailout in the wake of Greece and Ireland

And the ‘bailout’ beat goes on.

Greece signed a 110 billion euros ($154 billion) rescue package with the EU and IMF last May to avoid default in exchange for draconian austerity measures which it has begun to implement. But many see the repayment terms as too onerous

Oh, well if paying back these loans is "too onerous" than they should just be forgiven. Like we do in our country for mortgages.

Moody’s was the first of the three major ratings agencies to classify Greek debt as "highly speculative."

Don’t worry. That can’t happen here.

On Friday, euro zone leaders will discuss measures to enforce stricter budget discipline, boost economic competitiveness and strengthen the bloc’s financial rescue fund in an attempt to draw a line under the debt crisis

Don’t worry. That won’t happen here.

This article was posted by Steve on Tuesday, March 8th, 2011. Comments are currently closed.

One Response to “Moody’s Now Rates Greece Below Egypt”

  1. proreason says:

    Any word about California?

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