Fitch cut the “issuer default ratings” at the banks to “reflect challenges faced by the sector as a whole”. The ratings agency said: “These challenges result from both economic developments as well as a myriad of regulatory changes”. Credit ratings of the world’s biggest lenders have come under pressure as weak economic growth and concerns about whether European politicians have done enough to end the Eurozone debt crisis. Long-term issuer default ratings for Bank of America, Citigroup and Goldman Sachs were cut to A from A+. Barclays, Deutsche Bank and Credit Suisse were downgraded to A from AA- while BNP Paribas fell to A+ from AA-. Meanwhile, Germany’s attempt to save the Eurozone was hanging in the balance as Hungary and the Czech Republic claimed it would be damaging and protesters in Warsaw demanded Poland stands firm against Angela Merkel. Hungarian prime minister Viktor Orban said that central Europe had the potential to become the most competitive region in Europe. “The only kind of co-operation we can have with the eurozone is one which does not damage Hungary’s competitiveness,” he said. Poles marched under banners that read: “We want sovereignty, not the euro.” They were protesting against the Brussels deal that could see EU countries, including those outside the eurozone, face penalties for breaking tough centralized spending laws. Britain used its veto in Brussels, sparking an intense backlash. Ireland and Sweden are also nervous about the fiscal pact, but Germany and France still expect the other 26 members, minus the UK, to approve it. Mario Draghi, the head of the European Central Bank (ECB), doused the other big hope, for radical ECB support, warning that the bond-buying program was “neither eternal nor infinite”. He said there was little he could do to restore growth.Christine Lagarde, the head of the International Monetary Fund (IMF), said the debt crisis is not yet over: “No country or region is immune. All must take action to boost growth. Work must start in the eurozone countries and must continue relentlessly. The risks of inaction include protectionism, isolation and other elements reminiscent of the 1930s depression.”
6 comments:
Just a few days ago there were many reports that David Cameron had isolated Britain by his veto.It seems that these reports were wildly adrift, because now in the cold light of day the Poles, Hungarians, Czech, Swedes, and Irish are all having second thoughts about giving away their soveriengty to the EU. Remember that the Greek, Italian, and Spanish present governments have “sell” to their voters the idea of EU interference in the running of their countries – not exactly a vote winner. Slowly the governments of all the EU countries are beginning to see that Cameron was right. The facts are that the Merkel / Sarkozy plan to penalise countries that do not live up to their rules will face high Taxes, austerity measures, cut backs in spending, more borrowing, and job losses. This will prevent the one thing that European countries need, and that is growth. The financial markets support this view, because they don’t see how this plan can lead to growth. Lets face it the financial markets effectively control the worlds economies by setting the value of stocks and shares, along with currency values, and this is why the euro is at an all time low. Add to that the world credit rating agencies view, and the fact that they have already downgraded Spain’s credit rating, and they are threatening to do the same to many other European countries, and it becomes clear that the euro is dead. The answer is very simple; just let the EU countries revert to using their old currencies. This will allow them to use the one tool denied to them by the single currency, namely to re-value their currencies.
Perhaps the hold that higher aggregate "in the pocket" Euro purchasing power has over domestic politics is beginning to weaken.
Some EMU populations are, perhaps, beginning to wise up to the fact that, whilst the per unit purchasing power of the Euro may be higher than their domestic currencies, the problem is that enforced austerity and no chance of growth will continuously shrink the number of Euros in their pockets.
One by one the penny will drop - their future prosperity is better served by their own currencies and not the Euro.
Timo Soini, leader of the True Finns party in Finland, tells it like it is. Recommended reading!
http://synonblog.dailymail.co....
The European bailout plan is unacceptable. We are not against solidarity and helping those in need. It must however be done honestly and sincerely. The current symbiosis between the bankers and the political elite is not sincere.
The bailouts are illegal. They break our jointly agreed rules. They question the integrity of our fundamental institutions.
The bailouts are immoral. The money goes primarily to well-off bankers, who will not admit and accept their mistakes, which they made while enriching themselves with highly profitable business during the last 10 years.
The bailouts are economically mad. The over-indebted states are unable to get back on track this way, especially in this state of the world economy. The only certainty is that the bailouts will create huge costs to other European states.
In the worst scenario, many others will fall, as in a giant domino effect, before the dust settles.
And so it begins,the dissent and quarrels over self interest and conflicting national goals etc etc.The UK was only the first to leave the table .I doubt it will be the last.
Some of these countries including the Uk DO need structural reform,but the problem is not whether you undertake that.It is how do you go about doing it within the current context of greater deleveraging without quite literally consigning an entire generation of our youth to the unemployment scrapheap for the medium term and at the other end of the age spectrum consigning a generation or more to a standard of living that no developed country should be willing to tolerate for people in and approaching retirement. The complete absence of any agenda for growth coming out of these European politicians implies they really are going to fail because they are not going to have the degree of public support that they need to make this work and certainly not in the way they trying to impose via current policy.
This was always to be expected. Remove the franco-german pressure to agree, and when people sit back quietly and think they realise that the cause of the Euro crisis is shoe-horning completely disparate economies into a single system. The so called financial compact is more of the same. When will people learn??
... and the IMF (aka France) is pushing the UK to cough up another 40 billion to save that nasty little sh1t who has been ratcheting up the rhetoric against Britain all week. Perfect timing for Frau Merkel to come around this morning on the idea of Britain coming back into the dialague. Of course - they forgot they wanted our money.
The EU is well and truly finished. They and all their well planted common purpose Marxists have been caught out this week trying to drum up hysteria in our media. Time to make a list of British MPs and officials who are clearly working together against the interests of this country and strip them of all authority. Finally, the BBC and Channel 4 should be stopped from broadcasting their anti-British propaganda as long as taxpayers are forced to fund them.
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