Spain hit as Greek 'illness' spreads over Europe -- Credit rating downgraded

[Elmore Furth]

Source: The Times

The crisis affecting the eurozone worsened yesterday when Spain’s credit rating was downgraded less than 24 hours after Greece was sent into financial meltdown.

Fear of contagion gripped Europe’s financial markets when the debt rating agency Standard & Poor’s cut the rating on Spain’s sovereign bonds. The decision — coming after the agency downgraded Portugal’s rating and cast Greek bonds into the scrapyard, designating them junk — sent the euro plunging against the dollar.

The risk that weak eurozone economies might be infected by a Greek financial virus added pressure to an emergency meeting in Berlin, where the heads of the International Monetary Fund and the European Central Bank considered a proposal to triple the size of a bailout for Greece.

After a meeting yesterday with Dominique Strauss-Kahn, the IMF chief, and Jean-Claude Trichet, head of the central bank, German MPs said that Greece would need €120 billion over three years. That would almost triple the size of the bailout fund agreed in principle by the eurozone states and IMF under which the member states would contribute €30 billion and the IMF €15 billion.



Read more: http://business.timesonline.co.uk/tol/business/economics/article7111123.ece

---

It looks like the debt house of cards is getting a little shaky.

The spanish debt rating downgrade sparked European sell-off dropping the value of the Euro and the European stock markets.

http://business.timesonline.co.uk/tol/business/economics/article7110108.ece

[HCE SuiGeneris]

1. Tick, tock.

This countdown started a few years ago... and the USA is absolutely in the impact zone.

[Skink]

2. We got the Goldman boys on trial now.

[PassingFair]

9. They're just going to buy their way out with stolen money. nt

[pnwmom]

3. A crashing European economy will only add to our own financial troubles. n/t

[MUAD_DIB]

4. An interesting tidbit...

"Opposition to the bailout in Germany has hampered efforts by eurozone leaders to speak with one voice. Germans fear that any money lent to Greece will be lost and they resent the idea of funding pension benefits to Greeks that are superior to those enjoyed by Germans. To appease public opinion, Angela Merkel, the Chancellor, has insisted that Greece make bigger cuts in its state budget."

[liberation]

5. A possible positive outcome,

would be if this forces the eurozone to further their coupling towards a single entity. As far as treasury/economic policy is concerned.

It would be an interesting stage in history... to see if an union of involving very different cultures can survive the sorts of challenges which history is likely to throw around. I can't wait for the day when we understand our actual uniformity as a species, we really are one very large family. And yet so very easily separated, we're a silly species indeed.

[pampango]

8. It seems that Eurozone will have to go one way or the other. Either progress towards

"a single entity. As far as treasury/economic policy is concerned." Or recognize that you can't have a common currency without a common treasury/economic policy, disband the Eurozone and just stick with the EU without a common currency. The latter would be a big setback (perhaps permanent, perhaps temporary) for those Europeans who see a progression towards a more and more integrated continent as a positive thing.

[Name removed]

6. Deleted message

Message removed by moderator. Click here to review the message board rules.

[Quantess]

7. Financial meltdown.

[AngryAmish]

10. This is the sound of a credit bubble popping

When, over time, you spend more than you earn then after a while people stop lending you money.

This is going happen soon to Illinois. And, unlike Greece, we cannot withdraw from the Euro and print our own money. Unlike Greece, we are doing nothing about it.