EU Downgrade Threat Terrifies Investors — UPDATED: Nine Eurozone Countries Downgraded
- Posted on January 13, 2012 at 2:50pm by
Becket Adams
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The euro hit its lowest mark in over a year Friday on fears of a widespread European downgrade. It’s a sour end to what could have been one of the more positive weeks for Europe since this whole debt debacle began.
Among the countries on the list for a double-notch downgrade are Italy, Spain and Portugal. France and Austria are facing a one-notch downgrade.
“The consequence (if France is downgraded) is that the EFSF [European Financial Stability Facility] cannot keep its triple-A rating,” said Commerzbank chief economist Joerg Kraemer in a recent CNBC report. “That may irritate markets in the short term but wouldn’t be a big problem in a world where the U.S. and Japan also don’t have a triple-A rating anymore. Triple-A is a dying species.”
While he does have a point about Triple-A ratings becoming increasingly rare, he may be mistaken about the effect multiple euro downgrades could have on the global economy.
A credit downgrade would escalate the threats to Europe’s already disastrous financial system. It could drive up the cost of European government debt as investors demand more compensation for holding bonds deemed to be riskier than they had been. Higher borrowing costs would put more financial pressure on countries already contending with heavy debt burdens.
“To a large degree it’s widely anticipated,” John Wraith, Fixed Income Strategist at Bank of America Merrill Lynch, told CNBC. “However, we think the reality of it is going to have a knock-on, ongoing impact on these markets.”
“It clearly deteriorates still further the credit worthiness of a lot of the European banks and just keeps that negative feedback loop between struggling banks and the sovereigns that may have to support them if things go from bad to worse in full force,” Wraith added.
As mentioned in the above, talks of downgrades came just as the eurozone was receiving some positive news.
Earlier Friday, Italy had capped a strong week for government debt auctions, seeing its borrowing costs drop for a second day in a row as it successfully raised as much as €4.75 billion ($6.05 billion). On Thursday, Spain and Italy completed successful bond auctions. Meanwhile, European Central Bank (ECB) president Mario Draghi noted “tentative signs of stabilization” in the region’s economy.
However, European and the U.S. markets continue to buckle under pressure as downgrade fears the continue to grow. Adding to the market uncertainty is the fact that talks in Athens between the Greek government and private investors failed to reach agreement on a crucial debt swap.
“Remain alert tonight when U.S. markets close,” one eurozone source told Reuters.
Update: Ratings agency Standard & Poor’s has downgraded the government debt of France, Austria, Italy and Spain by one notch, but maintained Germany‘s at the coveted ’AAA’ level.
The cuts, which eliminated France and Austria’s triple-A status, deal a heavy blow to the currency union’s ability to fight off a worsening debt crisis.
Italy was lowered to BBB+ from A. Spain slipped to A from AA-.
The downgrades come as crucial talks on cutting Greece’s massive debt pile appeared close to collapse Friday.
Update: Here’s the final tally (via CNBC):
S&P lowered its long-term rating on Cyprus, Italy, Portugal and Spain by two notches, and cut its rating on Austria, France, Malta, Slovakia and Slovenia by one notch.
The Associated Press contributed to this article.
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Comments (60)
CulperGang
Posted on January 16, 2012 at 12:09pm“Why I don’t give you a job” hat tip: GNC & Andor Jakab
http://www.gcnlive.com/wp/2012/01/16/this-is-why-i-dont-give-you-a-job/
This is the kind of disease the 1% NWO Bilderbergers are spreading around the world…..and you thought this was endemic to the US right??
Report Post »Hollywood
Posted on January 16, 2012 at 2:53pmPerhaps the NEW NORMAL for credit ratings will be CC for sovereign debts in 2012????
Report Post »Maybe even to NO rating,as they are ALL a crapshoot right now!
mikee1
Posted on January 16, 2012 at 6:27amAnd it will be coming here soon under ODUMBO INC. II or a RINOROMNEY. Only an economic plan, like PAUL’S, can START TO TURN THINGS AROUND. IT COULD BE TOO LATE NOW…
Report Post »funwithguitars
Posted on January 15, 2012 at 8:55pmBecause I listened to Glenn, I have all accounts, savings, 401k’s, etc. sold. I*m OUT of the market. I sleep better at night. Everythings in physical silver. And since I bought sometime ago, my retirement fund has doubled. The run on gold and silver is not over. As the EU falls, and it will, the dollar will temporarily go up. Shortly thereafter traders will come back to their senses, realizing the EU’s fall will hurt the dollar. Then the dollar sinks….Silver and gold will fly high and stay there, as there will be no fundamentals left supporting the market. It doesn‘t matter if it’s inflation or deflation, no fundamentals get it? NO federal bank has said they would stop inflating, NO country has agreed to cut spending enough to make a diff. Get it, the Euro WILL fail…
Report Post »I did many hours of research to see if glenn was right. I found this guy and I now read his colorful comments nightly. His background is extensive also. I trust this guy. My point is his predictions for silver/gold are scary. And as I’ve read his predictions daily for over a year now, I’ve learned to trust what he says. No I’m not affiliated with him in any way. http://silver-and-gold-prices.goldprice.org/ Make sure it’s the one dated friday the 13th. So if you’re on the edge about deciding to buy gold, maybe this will help. God have mercy on us all…
His_Way
Posted on January 16, 2012 at 2:42amAlways a few good insights at marketoracle.co.uk, although not much “good” news.
Report Post »321481
Posted on January 14, 2012 at 6:04pmThe EU doesn’t have to worry in the short run, the Fed will take dollars and infuse them in the IMF, the IMF will play Santa Claus with you until the USA collapses, then your billions from the bankrupt US taxpayer will be over, and over is where the EU will be then.
Report Post »James 73
Posted on January 14, 2012 at 5:25pmAfter awhile we will be hearing ” US & the Eurozone owns quadrillion in debt…..”
Report Post »johnpaulkuchtajr
Posted on January 14, 2012 at 5:26amThe markets will probably fall dramatically on Monday and begin a long death spiral throughout the rest of 2012.
Obama will blame the entire fiasco on Bush when he could have taken the reins and beat this housing-induced problem by pushing the FAIR TAX through Congress.
Yep, all those bureaucrats have their food supplies assured, don’t they?
Report Post »wntsmallgov
Posted on January 13, 2012 at 11:32pmTime to start building up your supplies, we are in for the ride of our lives.
Report Post »trenier
Posted on January 13, 2012 at 7:12pmOne word…………. Duh… we r all surpised?
Report Post »drphil69
Posted on January 13, 2012 at 5:08pmHey EU, no worries – you are “TOO BIG TO FAIL.” See, if you go down, we go down, so the US will bail you out with money borrowed from China and then everything will be fine….
Report Post »Reggabaet
Posted on January 13, 2012 at 6:38pmYYYUUUUPPPPP!!!!!!
Report Post »So let’s remember to vote for Romney, cause Uncle Mitt’s going to make this ALL better!!!!
hempstead1944
Posted on January 13, 2012 at 5:07pmRaise you hand if you didn’t see this coming…….just what I thought ……
Report Post »SpankDaMonkey
Posted on January 13, 2012 at 3:55pm.
Do Ya’ll remember that first morning after the election?
When Obama and Biden were standing on the South Lawn looking out over America.
When Joe said “Let’s Run Out There And Screw Us An American!”
And Obama replied “NO Joe!!! Let’s Walk And Screw Them All”……….
Well their just about done………….
Report Post »drphil69
Posted on January 13, 2012 at 5:07pmNah, they’re just getting started. We still have plenty of food, fuel and power. When they‘re done there won’t be enough even for half of us.
Report Post »Reggabaet
Posted on January 13, 2012 at 6:39pmWhere is the MSM on BHO asking for how much more??? $1.??? Trillion???? WAKE UP FOLKS!!!! Or is it already too late……???
Report Post »BobtheMoron
Posted on January 13, 2012 at 3:46pmI ain’t no financial wizard, but I am capable of cogent thought and I can‘t get a grip on why the DJ isn’t 500 instead of12,000+. It makes no sense in light of unemployment, excess government regulation and the unfolding disaster that is Europe.
Report Post »7.62AirMailComeGetIt
Posted on January 13, 2012 at 4:03pmYou should youtube America Freedom to Fascism its about the FED but tell how when Napoleon was defeted the 1st runner came back and told the Rothchilds and they told england Napoleon won and the market crashed and they bought everything up for basically pennies on the dollar so what your seeing is the elite buying everything up with your bailout money so as it drops they buy and manipulate the market and the people
Report Post »hauschild
Posted on January 13, 2012 at 4:07pmBecause it’s being manipulated by people that believe they can pull-off whatever it is they’re attempting to pull off, before anybody notices.
No matter what, we’re porked. Can’t stay in a volatile market, can’t make money on one-tenth of one percent rates, inflation is beginning to form. Maybe the “mattress” investment is best short term. At least all you lose is the rate of inflation.
Report Post »Blackhawk1
Posted on January 13, 2012 at 4:11pmQE1, QE2, QE3.
That is what is falsely propping up the market for Obama’s campaign.
Report Post »Reggabaet
Posted on January 13, 2012 at 6:40pmMost of the sheeple are still asleep
Report Post »TomFerrari
Posted on January 15, 2012 at 11:26amBecause the “fed” keeps printing money.
A stock that should be worth $10 would become worth $20 if you doubled the money supply.
By printing money and monetizing our debt, the fed is artificially inflating stock prices.
How many of the fed’s board members own stock???
And there are still people that think the fed is “independent” and is therefore incapable of being corrupted?
WRONG !
Absolute power corrupts, absolutely.
This is what fiat currency is all about. They CANNOT do this with a gold standard. Gold is a physical asset, and changes in value with demand. Otherwise, its value is relatively equal to other assets, barring external influences. This is an inherent part of the free market. Without the gold standard, we do not truly have a free market/capitalism. With perpetual government meddling, we do not have a truly free market/capitalism. With millions of oppressive laws, we do not truly have a free market/capitalism. So, when people start badmouthing capitalism, they are showing their ignorance, either of the true nature of the free market/capitalism, or their ignorance of the external, artificial influences we currently live under, that manipulate the free market and taint and bastardize capitalism.
Report Post »Mateytwo Barreett
Posted on January 13, 2012 at 3:35pmTerror! ???? Opportunity? More likely.
Report Post »couple more Trillion “disappear”, and the beat goes on!
larrylarrylarry
Posted on January 13, 2012 at 3:25pmWhat buckle? More like a yawn. I‘m hoping for a free fall since I’m loaded up on 3X inverse ETFs.
Report Post »His_Way
Posted on January 13, 2012 at 4:37pmYea, who really cares about anyone else anyway?
Report Post »seeker9
Posted on January 13, 2012 at 4:53pm3x etf’s. You got an “E” ticket there!
Report Post »Joisey
Posted on January 13, 2012 at 3:16pmAnd as the first EU domino (Greece) tips over the cliff to oblivion, here comes Ben Bernanke, to tie U.S. taxpayers to this disaster.
Report Post »His_Way
Posted on January 13, 2012 at 4:33pmSurprise! Surprise!
Wow, and again we couldn’t see this coming?
And where is our leadership, where is their vision?
“There is zero percent chance that 2012 will result in a recovery and return to normalcy.” James Quinn, The Burning Platform.
Party on, MO and BHO, just keep up your extravagent parties, vacay’s, lies and corruption.
Report Post »jakartaman
Posted on January 13, 2012 at 3:15pmVigilance and night scopes
Report Post »lukerw
Posted on January 13, 2012 at 3:10pmIt seem that some Truth is leaking around the New Media!
Report Post »Noahide Ron
Posted on January 13, 2012 at 3:09pmGot stuff?
Report Post »gmoneytx
Posted on January 13, 2012 at 3:06pmYeah, Yeah…the sky is falling, the sky is falling.
Report Post »Bonnieblue2A
Posted on January 13, 2012 at 8:21pmUpdate the story Blaze, it is NINE eurozone countries downgraded:
Report Post »http://www.cnbc.com/id/45989399
Darmok and Jalad at Tanagra
Posted on January 13, 2012 at 3:04pmThey will go to the Feather and shiny button currency.
Report Post »netmail
Posted on January 13, 2012 at 3:03pmBut just last week everything was going to be alright? Be patient. There will be an announcement soon that will clear everything up. Like adding another 1.2 trillion to our debt. It’ll be fine. NOT…it will never be “fine” again in our freaking lifetimes.
Report Post »NoRoomForSocialismHere
Posted on January 13, 2012 at 3:15pmThe big money guys are playing games. They are trying to break one another using the market.
Remeber when the Bass Bros in Fort Worth TX tried to flood the market (80s) with gold or silver and someone else had more than they did and busted their butte…
Its a game that effects us all and they have fun doing it.
Report Post »END THE FED, it is just a way to skim money they never earned off the top aka money laundering
netmail
Posted on January 13, 2012 at 3:36pmNo room…yes, I remember but that was a LITTLE game compared to the complete collapse of the Euro and dollar. I can’t even imagine when the words “Backed by the complete faith and trust of the United States government” becomes meaningless and exposed as a total lie to everyone in the entire world. Everything is so leveraged now it’s like the Martingale gambling system and the bet is up to “all the money in the world”. Lose again and the next bet is “All the money in the world times 2”. And the odds are a 100% against winning. Oh yeah, Im an optimist. (sarcasim)
Report Post »Blackhawk1
Posted on January 13, 2012 at 4:26pmThis is what happens when a socialist society relies on other socialist societies. Hence the saying socialism never works because you eventually run out of other peoples money. The name they picked of “European Union” should have been the first clue as to the eventual collapse.
Report Post »kindling
Posted on January 13, 2012 at 4:46pmNetmail….you and I know this, and many others know this. The sad thing is MOST Americans have no idea what is coming because they don’t want to know. Those of us that lead by example are called whack jobs. Guess what, when the food runs out they will come looking for all the whack jobs. I wonder if Obama has food stored for his family? He knows better than most what is coming. I wonder if he thinks his pals will feed his family?
Report Post »Snowleopard {gallery of cat folks}
Posted on January 13, 2012 at 3:01pmListen the EU is doomed, and no thanks to the Obama suicide pact made with them we will soon pass into collapse as well when they finally take their death plunge. It is the last warning bell being sounded people, get ready for the storm is going to hit full force. When it comes expect Obama to declare marital law and a national emergency – he will be a dcitator completely at that point.
Report Post »NoRoomForSocialismHere
Posted on January 13, 2012 at 3:06pmGlobalism is the problem and that started at least 20yrs ago
Report Post »progressiveslayer
Posted on January 13, 2012 at 3:07pmThat is his goal to end capitalism,and it’s coming sooner than most people think and when the riots start Barry will declare martial law and clamp down.He‘s already neutered congress and he’s in the final phase of his plan to transform America.
Report Post »NoRoomForSocialismHere
Posted on January 13, 2012 at 3:07pmPoliticans had us lined up for beng part of the world unionism (Globalism), you know the ones that do the bidding of buisness.
Report Post »momrules
Posted on January 13, 2012 at 3:10pmAnd all this will happen before the elections in my opinion. He won’t take the chance of being voted out of office.
Report Post »Uncurable wound
Posted on January 13, 2012 at 3:10pmHeres something to chew on snow…
The only countries left in 2011 without a Central Bank are Iran, North Korea, and Cuba. In 2000 the list included Iraq, Afghanistan, and Libya but subsequent invasions by the U.S. and NATO eliminated those “problems”. Iran is next.
Gee I wonder if we will go to war with iran and korea? LOL
Report Post »To Arms!
lukerw
Posted on January 13, 2012 at 3:12pmAnd… we will be OutLaws!
Report Post »Gary S
Posted on January 14, 2012 at 7:36pmWonder if BHO can outrun a .380?
Report Post »maroon67
Posted on January 13, 2012 at 3:01pmThis is Detrimental! On top of that?!? BHO wants an additional $1,200,000,000,000 T to add to our deficit + downgrade in financial ratings + Mit taking the lead (http://www.kingofbain.com/?utm_source=email&utm_medium=email&utm_content=email1&utm_campaign=king_of_bain) = World Financial Crisis!
Report Post »NoRoomForSocialismHere
Posted on January 13, 2012 at 2:58pmThat European UNION, Globalism, NWO, Diversification and no Sovereignty that the RINO-GOP loves so much has really worked well. “W” is still make speeches on the subject what a traitor he was and is!
They have forced diversity and loss of jobs on us by unwarranted mass immigration and not enforcing the laws as well as letting ILLEGAL ALIENS in to thin down the power of the American Citizen at all levels.
Report Post »NoRoomForSocialismHere
Posted on January 13, 2012 at 3:10pmIn the 60s they tried to MAKE us switch to Metric and we refused, that was a part of the first installments to Globalism.
Report Post »oldguy49
Posted on January 13, 2012 at 2:58pmputing in a 1 acre garden this spring……….get ready……….also armed and sign says TRESPASSERS WILL BE SHOT-SURVIVERS WILL BE SHOT AGAIN…………
Report Post »gmoneytx
Posted on January 13, 2012 at 3:04pmI like it!
Report Post »lukerw
Posted on January 13, 2012 at 3:07pmThe problem is: Attackers out number and surprise the Defenders… so, historically, the Defenders never Win.
Report Post »Darmok and Jalad at Tanagra
Posted on January 13, 2012 at 3:09pmIf you want free fertizer, shoot, but just miss them.
Report Post »KickinBack
Posted on January 13, 2012 at 3:10pmHa! Yet you could leave no survivors and save the extra bullet. ;)
Report Post »Uncurable wound
Posted on January 13, 2012 at 3:15pmLukerw
Bastogne!!!
Report Post »To the german commander-”NUTS!!!”
We DEFENDED VERY WELL!!!
kindling
Posted on January 13, 2012 at 4:55pmOldguy…..set aside an area of land for a greenhouse and set up a small aquaponic garden. You can support it with chicken or horse or any animal droppings conposted into tea in the water. If you do things like keep the compost in the green house you can grow more food in a small area year round and no pests. It also only takes about 2% of the water that the same size ground planted garden would take. I am still picking tomatoes, and lots of greens.
Report Post »