34 Italian financial firms downgraded by Standard & Poor’s -- UniCredit SpA (UCG), Intesa Sanpaolo SpA and Banca Monte dei Paschi di Siena SpA (BMPS) were among 34 Italian financial firms downgraded by Standard & Poor’s, after the credit-ratings company reduced the nation’s grade last month. UniCredit, Italy’s biggest bank, and No. 2 Intesa had their long-term ratings lowered to BBB+ from A, S&P said yesterday in a statement. Monte dei Paschi, the No. 3 bank, was reduced to BBB from BBB+. All three have a negative outlook, S&P said. .....Italy’s credit rating was cut two levels to BBB+ from A on Jan. 13 as S&P said European leaders’ struggle to contain the region’s debt crisis would complicate the country’s efforts to finance borrowings. S&P yesterday revised its banking industry country risk assessment, known as Bicra, for Italy to group 4 from group 3, citing mounting risks. ...“Italy’s vulnerability to external financing risks has increased, given its high external public debt, resulting in Italian banks’ significantly diminished ability to roll over their wholesale debt,” S&P said in a separate statement on the country’s financial industry. “We anticipate persistently weak profitability for Italian banks in the next few years.” European nations are grappling with a debt crisis now in its third year as they seek to restore budget order and shore up the region’s financial industry. Spreads on some Italian banks are trading as if they were rated at the cusp of investment grade....go figure!?!?!?!...that means that either investors lost their marbels, or all the financial intitutions lost their credibility entireley !!!On Sunday in a measured but pointed open letter to the government, the Association of Support and Cooperation of the State Armed Forces, the professional association of full-time staff, warned that the Greek Armed Forces are monitoring the government’s moves “with increased concern” and that their confidence in the “intentions of the state” have been “shaken”.
6 comments:
Even if Greece does sign up to the cut backs and austerity programmes demanded by the EU so that they can get more loans, they will still go bankrupt, because without jobs and trade, both of which generate tax revenue, they will have no means of paying off their increased debt. Austerity, cut backs and job losses can only drive Greece further into spiralling debt. Today some 20% of the Greek labour force is unemployed, and for the young Greeks it is at 48%. Austerity and cutbacks can only add to this problem. Greece, like so many European countries needs to get people into work to pay taxes, and generate business, which in turn will generate tax revenue. OK so maybe some of the Greeks are work shy, but without jobs to go to, they have no chance to do anything differently. I would remind readers that all this financial pain across most of Europe is aimed at one thing only – to keep the euro alive. This dream is at the core of most of Europe’s problems. The simple truth is that a “one shoe fits all” financial policy cannot, and never could work, because of the divergent economies of Germany at one end of the scale, and Greece at the other end of the scale, along with the many countries in between. The failed, and flawed experiment of the single currency will next wash into Portugal, and others will follow. The single currency house of cards is collapsing. That which is happening today in Greece – austerity, cut backs, and job losses, leading to ever lower tax revenue from both workers, and business will wash into most of the rest of Europe. Finally, do not think that Germany will come out of this unscathed, because their debt exposure is still high despite the recent moves to reduce this
Greece's debt is already unpayable. Its manufacturing output has declined more than 15% in a year. In order to stand the slightest chance of paying off its debt, Greece should be stimulating growth but, instead, its austerity measures are shrinking the economy - making it even less likely that the debt will be paid off.
Unless the EU wants to keep Greece as the permanently unemployable cousin who lives in the basement and drinks all day, I see no alternative to allowing Greece to default and leave the Euro.
"The bankruptcy of Greece is no longer the threat to the eurozone that it once
was. For all the frustration caused by the constant delays - Greece missed
four deadlines last week alone - the time has not been wasted. Banks have
busily untangling themselves from the thicket of Greek debt; repricing and
restructuring debt and taking large write-downs. In total foreign banks have
slashed their exposure to Greece by 60pc."
Greece should default. Why should ordinary Greek people have to work harder, for longer, for less just to finance interest payments to banks that caused the problem in the first place with their dodgy accounting. We all know how the banks and the IMF work. They encourage you to borrow money they know you can't repay and are then happy to have you slave your life away just keeping up with the interest payments.
Greece should tell the IMF sharks to take a long walk off a short plank. For anyone doubting the viciousness of the international banking cartel along with the IMF check out this LINK
Also Germany has benefitted greatly from the Euro massively undercutting Greek industry and increasing exports to Greece at the expense of Greek jobs.....
Aha... and which Greek industry do you refer to? The shipyards which moved to South Korea? Or the thriving Olive oil business? What?
If Germany is serious about a unified Europe......I dont see many signs of it !!
So being serious about a unified Europe means coughing up any amount necesssary to subsidize a totally incompetent political class who basically bribed the electorate in passed decades with all kinds of perks they really couldn't afford? Or to subsidize a wage structure which, for ages now, simply cannot be founded by the economy and is fundamentally based on anual multi-billion EU subsidies?
The unfounded arrogance of a lot of Greeks, seeking the fault only at others is exactly the attitude which brought them into this situation in the first place....
The stupidity of some of these posts is insulting.
Capital controls would have to be imposed and borders shut to stop money flooding out of Greece.
It's long gone. I hear Vodaphone "empties" Greece daily at the moment. An estate agent friend tells me the relative buoyancy of the London housing market at the moment is partly down to Greek cash buyers.
If the banks catch a cold so be it: I'm not sure the price of staying in the EZ is worth the sacrifices the Greek people are having to make.
Though for once, the banks will have my sympathies. At least morally (I know not legally) the stronger members of the single currency should honour the debts of the weaker members because, well, that's what a single currency is. Or ought to be.
If Greece default and/or exits, it simply proves to the world at large that the Euro was a flawed project from the outset, and that it should never have gone ahead without fiscal union (harmonised taxes; a European finance ministry).
The world - and especially the surviving banks - won't forgive or forget in a hurry. The EU right now looks pretty stupid, especially Merckel. And with good reason.
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