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Eurozone Crisis: Markets To React After Standard & Poor's Credit Warning

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First Posted: 06/12/11 07:16 GMT Updated: 06/12/11 07:21 GMT   PA

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The eurozone debt crisis has deepened as Germany, France and 13 other members of the single currency faced having their credit ratings downgraded.

In a move that will pile pressure on eurozone leaders and is likely to hit markets on Tuesday morning, it emerged that ratings agency Standard & Poor's had put all but two euro nations on credit watch.

The only two not named were Cyprus, which was already under review, and Greece, which holds the world's worst rating.

The bombshell came as eurozone leaders frantically tried to prevent the break-up of the single currency and restore stability after weeks of mounting crisis.

After emergency talks in Paris on Monday, French President Nicolas Sarkozy and German Chancellor Angela Merkel renewed calls for EU Treaty change to solve the single currency crisis.

They said they wanted change to be carried out by all 27 member states if possible - or at least the 17 eurozone countries. The aim would be to allow far tougher rules and sanctions governing the eurozone in future to reassure markets about the euro's long-term stability.

The talks marked the start of a week of intense efforts to settle a eurozone stability deal to convince markets once and for all that the single currency can survive the current economic turmoil. The key plan is to toughen eurozone checks and balances - something lawyers say will need treaty change.

The move towards treaty changes prompted fresh difficulties for Prime Minister David Cameron as eurosceptic Tories stepped up calls for a referendum on the European Union.

Downing Street insisted that the scale of the proposal - to be put to an EU summit later this week - did not amount to change warranting a referendum in the UK. However Work and Pensions Secretary Iain Duncan Smith sided with the eurosceptic right in the Tory Party by suggesting that the impact from any treaty change would demand a national vote.

Mr Cameron, who will attend a meeting of the European Council in Brussels later this week, insisted nothing had changed to justify such a move.

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The eurozone debt crisis has deepened as Germany, France and 13 other members of the single currency faced having their credit ratings downgraded. In a move that will pile pressure on eurozone lead...
The eurozone debt crisis has deepened as Germany, France and 13 other members of the single currency faced having their credit ratings downgraded. In a move that will pile pressure on eurozone lead...
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EU Referendum Required
5 Fans
06:15 AM on 12/07/2011
The so called "leaders" Germany and France are simply delaying the inevitable.

The Eurozone is a FAILED EXPERIMENT!

Time to wake up and smell the coffee.

It is GOING NOWHERE!

If you don't know where you are going every road will take you there.

That is exactly the situation we have here!

The quicker the Euro dies the better for all economies LONG TERM

SHORT TERM political careers are all that the so called leaders are interested in.

NOTHING ELSE!
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Historian67
4 Fans
11:45 PM on 12/06/2011
At the risk of repeating myself, I will once again say that as long as we (the people of the world) fail to recognise that the only way to get close to guaranteeing a peaceful life of low risks and perhaps retain our sanity is to have nothing to do with excessive GREED.

My advise? Learn to be happy with a life that meets your basic needs. A roof over your head, good relationships, an odd holiday, a healthy hobby or two. Avoid voting for politicians that promise you too much. They are only seeking power that they can't get any other way and they are never there to sort out the mess they create. The Fred Goodwins of the world? More trouble than they're worth. To hell with them. That's where they belong and where they will end up.
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davm744
57 Fans
08:49 PM on 12/06/2011
just why should the eu be given any more money , if the uk give these lot any more tax payers money and it goes under as it will they should be prosecuted .
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Alfred Sydney Cavill
8 Fans
05:41 PM on 12/06/2011
I think it's time Standard and Poors credit rating was downgraded, it's obvious they have no idea what economics is all about.
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ronnieince
57 Fans
07:27 PM on 12/06/2011
Lenders are not obliged to take any notice of their advice - its their money - if I chose to lend to someone you tell me is " dodgy " I don't have to take your advice - but if they fail I might rue the day I ignored it - so if in doubt don't lend is a good rule if thumb - nobody ever went bust by not lending - all these banks that went belly up did so by lending to dodgy borrowers !!!!!
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cantabria
my default position is wrong
363 Fans
08:36 AM on 12/07/2011
Not true, all these banks went belly up because they bought massive packages of junk loans which credit agencies like S&P had rated AAA. No bank went bust because a few people couldn't pay their mortgages, credit cards and personal loans. S&P is just another US government agency, corruptly manipulating the world economy for the benefit of its masters - the US government and the large US banks.
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Southern law girl
Researching my viewpoint....
161 Fans
07:32 AM on 12/07/2011
I totally agree. These credit rating agencies, both for countries and individuals cause more problems than they are worth. In my view they have made a profession for themselves. Take credit rating agencies for individuals, there is an undisputed conflict of interest, they represent both institutions who loan the money and the individuals who borrow from those institutions - conflict of interest. This is an observation I made a long time ago, and until the conflict of interest is resolved, there will always be a danger of bias. In many respects the same applies to nation credit rating agencies.
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copperring
0 Fans
04:23 PM on 12/06/2011
Who are theese Standars & Poor's ?
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figurewizard
22 Fans
02:04 PM on 12/06/2011
The only surprise in this news is that it hadn't already happened a long time ago.The economically illiterate politicians who were responsible for launching the Euro - fiat money with no visible means of support should have inspired this credit warning on day one.
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lastpost
see biography
439 Fans
01:19 PM on 12/06/2011
"Standard & Poor's Credit Warning"
If the utterances of Standard & Poor are so creditable. Why is it they failed to point out that, banks lending to those being encouraged to live beyond their means constituted a recipe for disaster?

"The bombshell"
Needs to be dropped on these who failed to do their job. The market is merely exacerbating a problem that they bet us into. They are still utilising their entire bag of trading tricks, in order to extract the last groat from the groaning victim. The intention is not to aid a return to solvency, but sheer usury. Robbing the corpse if need be. If the body doesn’t stand up to and shake-off those assassin assailants, nothing will save it. The ten pounds of flesh these profiteering psychopaths now deem due, equates to the entire head. Its like giving blood transfusions to someone covered in leaches. Even big bazookas can’t help poor palookas.

"Downing Street insisted that the scale of the proposal - to be put to an EU summit later this week - did not amount to change warranting a referendum in the UK."
Why did the headless chicken cross the road? To avoid the referendum.
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rabidrightwatch
Green lefty & active environmentalist
2963 Fans
04:24 PM on 12/06/2011
..well said, I was about to write almost the same thing, but repeating the same argument would dilute the argument.. thanks
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althorpe
26 Fans
01:18 PM on 12/06/2011
Back in the 70's we were told that the EU was for easier inter country trading. We were not told about being ruled by Brussels or having a common money policy.
Also the amount of money we waste each year, approx £65 billion could be better spent in this country and not used to keep other countries floating.
The countries outside the EU are coming out of the recession while we face the possibilty of a second wave.
The EU is only good for large countries i,e, Germany & France who have had more seats in the EU parliament and a lot more grants from our taxes.
When we went decimal currency we saw a massive inflation. When we went metric with fuel we have seen massive price increases. It use to be 1p per gallon rise at budgets. Now it is 2p - 3p per litre = 9p - 14p per gallon.
If we went euro, there would once again be massive price increases. This has happended in the euro zones already.
Best way is to get out of the EU and for us to once again become Great Britain.
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Michael II
Neither the one, nor the only
254 Fans
02:12 PM on 12/06/2011
"The countries outside the EU are coming out of the recession while we face the possibilty of a second wave"

Which ones?

"If we went euro, there would once again be massive price increases."

The UK was right stay out at the time, as it would have come in at a very unfavourable rate. There is no serious talk of it joining at any time in the near future.
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Michael II
Neither the one, nor the only
254 Fans
12:39 PM on 12/06/2011
Isn't US personal debt at something like $50,000 and the UK around £30,000? How come Europe's only remaining industrial exporter is being targeted? Unlike the US, it doesn't have a property market nor a credit card bubble which burst.

As someone pointed out elsewhere, had anyone here ever used the word "trillion" before hearing about US debt? Yet we want to bash the German economy as well? Why doesn't S&P talk so much about the bankruptcy of California? Did it bring down the dollar? Why not? Whole towns in Alabama have recently gone under. Why don't we hear S&P talking about them?
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HUFFPOST SUPER USER
andy crapp
17 Fans
05:53 PM on 12/06/2011
Yes the German economy is strong and here are some of the reasons why. There is a government protection order on VW to prevent it being taken over by any foreign company.
German owned N-Power is ripping off British energy users.The German government would not allow British Gas to buy into German utilities.Yet German State owned transport companies have bought Tyneside metro and Arriva trains and buses.If only Britain protected its industries like that then we too would be up there with Germanyand France
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ronnieince
57 Fans
07:22 PM on 12/06/2011
andy crapp - you are living up to your screen name - There is nothing to stop UK companies buying German - Vodofone bought Mannesman one of Germany;s largest companies - the difference is that the vast majority of German companies are GMBH's - private companies not AG's - public companies ...

And you call charging UK customers 50% less for their electricity and gas than German ones " Ripping Off " - any German would gladly swap their energy bills for UK ones - the UK is still one of the cheapest places in Europe for gas and electric - just check the European Domestic Energy Prices website for youself .

It would be illegal under EU Law for Germany to stop any EU purchaser of a German company - and VW is State owned by the various German Lander - Col Ghadaffi owned 20 % of Daimler Benz , BMW is a private family owned company as are many large German companies - Robert Bosch is a Trust and ZF is owned by the City of Friedrichshaven there are more PUBLIC companies in the UK than the rest of the EU put together - public companies are rare in Germany - common in the UK
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HUFFPOST SUPER USER
jacksdad41
Quant Je Puis
169 Fans
 
11:33 AM on 12/06/2011
Having watched a programme on the rise and fall of RBS last night I can only say from my personal opinion that individuals are to blame for the current crisis. 3 Months prior to collapse Fred "the shred" Goodwin was still stating there was "no problems" within the bank and the sub prime mortgages represented only "a very small and insignificant" amount of RBS money. After buying ABN Ambro for mostly cash a month later whilst stringently denying to shareholders he was in any kind of negotiation for any "substantial acquisitions" the lying toe rag was already planning a pan handling of the crap he knew was to come whilst negotiating a massive pay off and pension.
When he bought Melon and Citizens what were the SEC doing to protect the public when all the great American economists could see the boom was unsustainable?? - The collapse of Lehman Brothers was the catalyst for the house of cards effect.
While many causes for the financial crisis have been suggested, the United States Senate issuing the Levin–Coburn Report found "that the crisis was not a natural disaster, but the result of high risk, complex financial products; undisclosed conflicts of interest; and the failure of regulators, the credit rating agencies, and the market itself to rein in the excesses of Wall Street." Someone, somewhere or a group of individuals did, are and will profit from the last collapse and will almost certainly have a hand in the next.
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HUFFPOST BLOGGER
Lawyer13
retired Lawyer, General and Psychiatric Nurse, wit
8282 Fans
 
09:31 AM on 12/06/2011
This is certainly a wake up call to Germany and France who will suffer more than other smaller countries if their rating is down graded in three months time, it will also make it more difficult for the EFSF bonds to be sold to prop up the Euro bail out fund too.
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HUFFPOST SUPER USER
Roy Fowler
I try....I really do!
106 Fans
09:21 AM on 12/06/2011
I dont know if i should laugh or cry!! So Standard and Poor is thinking of "downgrading" the credit staus of Eurozone countries.......

Germany hs solid year on year growth and staggeringly low unemployment and is the "Target" we all should be aming to be like. Yet; an American company is thinking about cutting its rating. Why?
How independent is this American company? How can a dozen countries be looked at as a group, when each is an individual nation?

I smell the stink of corruption here folks!!!

Who in Gods name would benefit from this insanity?

Only One; BANKS!!!

Time for the massive loan rip off on a Global scale; Time for shares to tumble and be bought cheap; Time for pensions and savings to be plundered to cover excessive new "costs" and wages pushed down or frozen.

The BANKS want the working man and woman crushed, in despair and under their direct control and they are doing this NOW; they control the GOVERNMENTS of Greece and Italy and they want MORE!

Germany and France need to tell the American company Standard and Poor that they are "opting out" of their ratings system and setting up a new independent Euro based ratings firm. If we are going to go down, then lets not have an American company deciding if we shall live or die.
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ronnieince
57 Fans
04:25 PM on 12/06/2011
Nothing to stop any country from opting out - and nothing to dstop any investor ignoring the Standard and Poors ratings if they think they know better .

It does not matter who the ratings agency is or what they say or what their national origin is - it is what investors believe - if you believe a 3 legged horse a certain winner you wil bet on it - you might even be proved right - but the reality is most of the time 4 legged horses are the winners .

And we have experience of the value of German promises on pieces of pieces of paper- I'm not sure a German promise of " Prosperity in our Time " would convince many UK investors - it was their disregard for pieces of paper that has brought us to the current European mess remember !!!!!
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copperring
0 Fans
04:30 PM on 12/06/2011
Hear,hear! Well said. Standard & Poor's ? Who do they think they are and why we don't officially ignore them; and one more thing; how do they make their money? I smell the rat.
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