S&P downgrades France’s rating; Greek swap talks on hold; Euro hits new low
Stock markets and the Euro traded lower Friday as Greek debt swap talks were put on hold and France’s Finance minister confirmed that Standard & Poor’s has downgraded the country’s credit rating.
Francois Baroin confirmed media reports that the rating has dropped one notch from the top triple-A level to AA+. S&P was expected to announce the downgrades of more European governments after the markets closed. A downgrade would most likely increase the costs of borrowing.
Various reports said Germany and the Netherlands would keep their top ratings.
Earlier, representatives of private bondholders said crucial negotiations between the Greek government and its private creditors on a deal needed to avoid default had been “paused for reflection,” which raised concerns the negotiations were close to collapse.
The talks are aimed at renegotiating the face value of bonds Greece has issued in order to reach an agreement on how much of a haircut the banks will take voluntarily.
By making the deal voluntary, Greece would dodge a legal default, which risks triggering a much deeper financial crisis that could curtail European lending.
If Greece's default is disorderly — with the various lenders uncertain of how much they will be repaid — the risk is that banks will become unwilling to lend because they can no longer count on enforcement of the rules that protect lenders when borrowers fail to meet the terms of their loans.
More immediately, the bond swap aims to reduce Greece's debt by €100 billion (130 billion dollars) and is a key part of a second, €130 billion (169bn) international bailout installment.
European markets closed lower, with London's FTSE 100 off 0.46%, Frankfurt's DAX down 0.58% and the Paris CAC 40 closing off 0.11%. The Euro fell to a 17-month low, trading down 1.2 per cent at 1.2665 US.
Traders had earlier been relieved at successful government bond auctions in Italy and Spain, which had raised hopes that policy-makers may finally be getting a grip on Europe's debt crisis after months of procrastination and indecision.
On Friday, Italy had seen its borrowing costs drop for a second day in a row as it easily raised €3 billion.
Last 5 December S&P warned it might downgrade 15 members of the Euro zone. It later said it might also downgrade the European Union and the EU bailout fund. At the time, it said it was reviewing the long-term borrowing ratings for Austria, Belgium, Finland, France, Germany, Luxembourg and the Netherlands, and both the short-and long term ratings on Ireland, Italy, Malta, Portugal, Slovak Republic, Slovenia and Spain, as well as the short-term ratings of Cyprus.
S&P cited a growing reluctance of banks to lend, rising bond yields, continuing disagreements among European leaders on how the resolve the region’s debt crisis, high government and household debt and the rising risk of recession.
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but they created it, its their problem, and good luck,
but we must come out, or those corupt sods will try every trick in the book,to get our money.
“Michael Fuchs, deputy leader of the Christian Democrats, said: 'This step is out of order. Standard and Poor's must stop playing politics. Why doesn't it act on the highly indebted United States or highly indebted Britain?'
”He added: “If the agency downgrades France, it should also downgrade Britain in order to be consistent.”
www.guardian.co.uk/business/2012/jan/13/eurozone-crisis-france-credit-rating-aaa
The UK's only advantage over the likes of France, when it comes to producing growth, is having its own Central Bank. And given the poor numbers the UK economy has produced as of late, we can see that this advantage is not put into use very well. The UK's access to financial markets has failed to deliver.
All germany is doing by saying what they said, is being spitefully jealous of us brits. France said the exact same thing back in december only to be put in its place. No doubt we will put germany it its place too, as clearly they are trying to avoid their credit rating being downgraded by trying to deflect attention to britain just like france tried to deflect the attention to britain in december but failed.
Still here :-)
www.tradingeconomics.com/united-kingdom/cash-surplus-deficit-percent-of-gdp-wb-data.html
Err cuts in government public spending, cuts to NHS, cuts to Education, cuts to Welfare, cuts to military spending and cuts in public sector jobs. Rise of 2.5% of value added tax, increased taxes, government scheme to support people in starting a buisness, such as the enterprise allowance scheme - Increase in new businesses means increase in growth.
The list goes on and on Forget, though am sure as you claim to know about economics and so much about the UK's debt issues you would have been well aware of that. But then clearly you were not aware, and as such it makes you views on the UK situation somewhat uneducated.
Oh and anyone with a clue about economics can tell you the cash surplus/deficit data (e.g countries cash flow on trade) is based purely on products exported and imported. It does not give you a total view of the countries income and expenditure, as it does not include the income from the financial sector, that makes up 10% of the countries economy now does it include income from national taxes either. I think you will therefore find that the countries bank account is clear in the black and not in the red, as many of you argentines would like to believe.
By the way a trade deficit does not effect government revenues as much as you think, as most trade is between one company and another company abroad, not between governments. Oh and by the way your chart you linked to over covers upto 2009 so its 2 years out of date anyway.
In fact the annual cost to britian for servicing its national debt is only 3% of our GDP, about the same amount of money we spend on our defense budget each year. As of July 2011 the national debt amounted to 64% GDP, which compared to the national debt of the 1950's, which was around the 200% GDP, so todays national debt issue is nothing but a ripple in the pond. I appriecate you argentines are all worried about us, but seriously why worry, after all we are not worried.
And the link I posted before has nothing to do with the trade balance; read it again, it is a measure of public revenue minus spending as a function of GDP - that is, it measures whether countries are running budget surpluses or deficits (if you check China, a trade surplus country, you'll see that for the last few years she too has run deficits at that measure). It's widely known that Britain's fiscal deficits have approached 10% of GDP since the financial crisis, as the graph shows.
Also i made it clear britian is capable at servicing its debts as the cost of doing so is only 3% GDP. You will see that even in britains boom years the cash surplus/deficit was in deficit. Yet we were still making money overall and the economy was booming. So sorry but relying on the cash surplus/deficit charts to give a picture of whether britian can cope is naive to be honest. Oh and it also fails to take in to account money made from bonds and gilts too.
in their case, its their own fault
in our case, its their fdault .
The Telegraph
“UK has third biggest budget deficit in Europe”
”Britain’s shortfall in its finances amounted to 10.4pc of gross domestic product (GDP) in 2010“
The Guardian
”UK budget deficit 'to surpass Greece's as worst in EU'“
”European commission's spring forecasts put UK budget deficit this year at 12% of GDP – the highest in the European Union and worse than Treasury estimates“
Financial Times
”Why cutting fiscal deficits is an assault on profits“
”In the second quarter of 2011, the [UK] government ran a financial deficit of 9.3 per cent of gross domestic product.”
both you imbeciles, the debt was high for in that time, totally different time because there was no welfare system like how it's today in the UK.
reality is and I showed the charts of Merril Lynch and JP Morgan chase banks many times here that UK's debt to GDP in reality is 1000% and Teaclown even commented that it's not possible to have a GDP above 100%. All what the UK's economy has is the london banking (broke) system and that's why they fight the TOBIN TAX what is a nail of the coffin of the UK's economy. Who's behind it? The Germans.
Yawn.
mmmm , thats what the romans said,
but as you know different, then the point is lost, is it not .
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