Standard & Poor's Ratings Services has downgraded Spain a notch, citing increasingly unpredictable financing conditions that could squeeze a private sector already pressured by struggling economic growth. The move comes as politicians in Slovakia finally voted to expand Europe's bail-out fund, ending a nail-biting stand-off that threatened the Greek rescue mission and rattled global markets. S&P expects theowing challenges for Spain's private sector as it seeks fresh external financing to roll over high levels of external debt. S&P now rates Spain at AA-, three steps below the top AAA rating. Its outlook is negative. Slovakia became the last of the 17 members to ratify new powers for the €440bn (£385bn) European Financial Stability Facility (EFSF) in a move that will deliver eurozone leaders as much as €3 trillion firepower against the escalating debt crisis. The news came as the Financial Times reported that emerging market countries are working on ways to contribute money rapidly to expand the effective firepower of the International Monetary Fund, with the aim of increasing its role in fighting the eurozone sovereign debt crisis. An announcement is due at the G20 in early November, it is claimed.
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Friday, October 14, 2011
Standard & Poor's Ratings Services has downgraded Spain a notch, citing increasingly unpredictable financing conditions that could squeeze a private sector already pressured by struggling economic growth. The move comes as politicians in Slovakia finally voted to expand Europe's bail-out fund, ending a nail-biting stand-off that threatened the Greek rescue mission and rattled global markets. S&P expects theowing challenges for Spain's private sector as it seeks fresh external financing to roll over high levels of external debt. S&P now rates Spain at AA-, three steps below the top AAA rating. Its outlook is negative. Slovakia became the last of the 17 members to ratify new powers for the €440bn (£385bn) European Financial Stability Facility (EFSF) in a move that will deliver eurozone leaders as much as €3 trillion firepower against the escalating debt crisis. The news came as the Financial Times reported that emerging market countries are working on ways to contribute money rapidly to expand the effective firepower of the International Monetary Fund, with the aim of increasing its role in fighting the eurozone sovereign debt crisis. An announcement is due at the G20 in early November, it is claimed.
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8 comments:
Debs
Belgium hasn't been in the news, how then are the Agencies supposed to know about it? If there is one thing that can be said of them, they always manage to miss salient and important economic happenings that would affect the markets. They have the ability to tell the markets what is going to happen when the news has reached the mainstream.
One Eurozone debtor nation that has flown under the radar of the mainstream media is Belgium. This nation has been without a government for nearly 500 days, has a debt-to-GDP ratio of nearly 100 percent and a level of per capita debt that exceeds that of Spain as shown here:
http://viableopposition.blogsp...
I've posted articles on four of the PIIGS nations so far and with the ECB being forced to buy the bonds of both Greece and Italy in recent days in an attempt to keep the Eurozone afloat, I thought I'd take a look at one of Western Europe's very quiet debtor nations - Belgium.
Belgium is a rather small European nation located along the coast of the North Sea snuggled between France, the Netherlands and Germany. It is a member of the EU, the OECD and NATO and was part of the Netherlands until it achieved independence in 1830. In fact, Belgium is the home of the headquarters of the European Union. There has been longstanding domestic tensions between the 6.6 million Flemish who speak Dutch and live in the north part of Belgium and the 4.1 million Walloons who speak French and live in the southern part of Belgium which has led to the granting of political autonomy to the Flanders and Wallonia regions.
The EFSF will now be expanded to (a notional) €3 trillion. Yet only a couple of the 17 member-nations are solvent. Banking by the Bonkers?
It is reminiscent of post-WW1. France and, to a lesser extent, the UK financed WW1 by borrowing from American banks. After the war the Americans wanted their money back, but Germany was unable to pay their reparations. Solution?
The Americans lent to the Germans who paid France & UK who paid the Americans. Round and round it went earning the bankers etc fat fees.
The EFSF will now be expanded to (a notional) €3 trillion. Yet only a couple of the 17 member-nations are solvent. Banking by the Bonkers?
It is reminiscent of post-WW1. France and, to a lesser extent, the UK financed WW1 by borrowing from American banks. After the war the Americans wanted their money back, but Germany was unable to pay their reparations. Solution?
The Americans lent to the Germans who paid France & UK who paid the Americans. Round and round it went earning the bankers etc fat fees.
Silvio Berlusconi is to stake the fate of his government and his own political future on a confidence vote in parliament on Friday.
Standing before a half-empty chamber boycotted by the opposition, he appealed on Thursday for support from the chamber of deputies, the lower house of the Italian parliament, saying: "There are no alternatives." Berlusconi decided to seek a vote of confidence after losing a crucial division on the public accounts earlier this week.
The result of the confidence vote is due at around 11.30am GMT on Friday. To survive, the government needs only to secure more votes than the opposition. If it loses, it is constitutionally bound to resign.
All but six deputies were missing from the opposition benches when the prime minister got up to speak, the main opposition parties having decided to stay away from the debate in protest at Berlusconi's refusal to step down.
Under mounting pressure from the courts, where he is a defendant in three trials, the prime minister leads an increasingly fractious party.
However, one of the biggest question marks hanging over Friday's vote was removed when his chief ally, Umberto Bossi, the leader of the Northern League, confirmed his support for Berlusconi's rightwing coalition. "The government will still be here tomorrow evening," he told reporters after listening to the prime minister's speech.
But there is still a risk that individual maverick deputies will stay away in numbers sufficient to bring down the government. This week brought a high-profile defection in the person of Santo Versace, the brother of the designers Donatella and the late Gianni Versace.
Santo Versace was elected for Berlusconi's party, the Freedom People (PdL), when the right stormed back into power three years ago. But, he said: "The economic situation is critical. I'll be voting against [the government] because it is better to change."
The latest crisis to engulf Berlusconi's government has come in the midst of the eurozone emergency at a time when Italy is battling to convince investors of its creditworthiness, despite massive public debts of around 120% of GDP.
So far this year the government has passed four increasingly stringent austerity packages aimed at reducing the budget deficit. But it has been fiercely criticised, not only by trade unions but also employers' groups, for neglecting measures to stimulate economic growth.
Unusually for a conservative government, Berlusconi's is under open attack from the leading bosses' federation, Confindustria. Alarm over the state of the economy also helps to explain the emergence in recent weeks of critical factions in the PdL, notably one centred on a former minister, Claudio Scajola, who resigned last year in an alleged corruption scandal.
Bossi too has been having difficulty controlling the League where dissatisfaction is growing over his autocratic style of leadership. He was barracked at a congress last weekend in Varese, north of Milan, after he imposed a new, unelected local party secretary.
Scajola said he and his followers would support the government on Friday and the PdL's parliamentary business managers appeared confident they could muster enough votes in the 630-member chamber. There has been widespread media speculation that rebels in the Northern League and Berlusconi's own party would prefer to wait until January before delivering a fatal blow to the government.
That could clear the way for an election in the spring – before taxpayers start to feel the full effects of the tax rises and spending cuts imposed in recent months. But with Berlusconi's approval rating below 25% in the polls, the right has a vast amount of ground to make up.
The president, Giorgio Napolitano, does not have to dissolve parliament until 2013, however, if there is enough support for a cross-party "technical" government to steer Italy out of the eurozone crisis and perhaps recast the country's much-criticised electoral system. A frequently mooted candidate for prime minister is the economist and former EU commissioner Mario Monti.
Berlusconi discounted the idea in his speech to the chamber: "The problems of the country cannot be resolved by a technical government not democratically legitimated to make choices that in the present circumstance would also be unpopular ones," he said.
FRANKFURT—German bankers railed Thursday against European Union proposals that would force the Continent's banks to raise capital and further write down the value of Greek debt on their books, arguing that the moves themselves could force the sort of financial crisis that Europe's leaders are working to avoid.
Deutsche Bank AG's chief executive, Josef Ackermann, cautioned Thursday that a credit crunch could result if Europe's leaders enact higher capital levels for banks and big haircuts on sovereign debt.
The five major German banking associations also sent a letter to German Finance Minister Wolfgang Schäuble, warning against phasing in regulatory requirements too quickly. "It can't be in the interests of the stabilization of the financial markets to fabricate an alleged weakness through an artificial intensifying of capital requirements," the banking associations wrote
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