Who's to blame For the European Debt Crisis and Rating Downgrades?

Tue, 03/29/2011 - 16:55 EDT - Seeking Alpha

Soner Kistak submits: Recently, there was an announcement of two important pieces of news flows from S&P: a) Downgrade of Portugal’s credit rating to BBB- ;b) downgrade of Greece’s rating to BB-. S&P statement expressed the rating agency’s concern on Greece. They said that the country might need to restructure, and existing bondholders might lose out. According to the decisions taken by the EU leaders’ meeting on March 25 , the repayment of loans granted to Greece through European Stability Mechanism would take priority. Similarly, Portugal’s rating by S&P was reduced behind the country’s weakened capital market access, and its likely considerable external financing needs in the next few years.

There is no doubt that there are good justifications for the downgrades by the credit rating agencies. However, the current situation is a result of a process that has been shaping in the last 10 years with the introduction of Euro. While theComplete Story »

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Fitchslapped: Italy Downgraded To BBB+ (Outlook Negative)
The France-based ratings agency has just joined China's Dagong, and US Moody's by Fitch-slapping Italy with a BBB ratings handle. Citing four main reasons: election results which and 'non-conducive' for further structural reforms, deeper than expected recession, greater than expected budget deficits, and a weak government less able to respond to shocks. But apart from all that, as we noted earlier, Italian stocks and bonds are bid. Via Fitch:
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Just crossing the wires. Below is the full release. --------------------------------
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Who's to blame For the European Debt Crisis and Rating Downgrades?

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