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June 14, 2010, 2:49 p.m. EDT
Moody's downgrades Greek debt to junk
This update corrects the figure for Dow's session high.
NEW YORK (MarketWatch) -- Moody's Investors Service on Monday downgraded Greece's government bond ratings to junk in a move that knocked some gains off U.S. stocks.
The ratings agency slashed Greece's sovereign-debt rating by four notches to junk status of Ba1 from A3, reflecting its view of the country's medium-term credit fundamentals.
"The Ba1 rating reflects our analysis of the balance of the strengths and risks associated with the euro-zone/IMF support package. The package effectively eliminates any near-term risk of a liquidity-driven default and encourages the implementation of a credible, feasible, and incentive-compatible set of structural reforms, which have a high likelihood of stabilizing debt service requirements at manageable levels," said Sarah Carlson, Moody's senior analyst.
"Nevertheless, the macroeconomic and implementation risks associated with the program are substantial and more consistent with a Ba1 rating," she added. The outlook on all ratings is stable, Moody's said.
The Dow, which had traded as high as 10,329 during the session, trimmed its gains to stand at 10,250 after the Moody's move.
Originally posted by Subjective Truth
Don't worry everything is just fine I am sure they can pull themselves out of this.
The ships are sinking one by one. And we still believe TPTB that everything is peachy. Spain will be next. Funny thing is the US and UK are just about as bad off. Hmm makes me wonder is the market fixed? Thank God for propaganda and fake money or we would be in a deep hole right now.
Europe Looks to Break US Ratings Monopoly
Few doubt that US ratings agencies contributed greatly to the global financial crisis. Europe is now worried that the euro could also fall victim to credit downgrades -- and is exploring the possibility of creating its own ratings agency.
In the United States, where the rating agencies are based, they have long since lost their aura of infallibility. The agency that supervises the markets, the Securities and Exchange Commission (SEC), as well as dozens of companies and private individuals, have filed damage suits against the rating agencies for having failed entirely in their assessments of billions of dollars worth of investment vehicles backed by subprime mortgages.
Because the issuers of the toxic securities paid for their ratings, the agencies constantly found themselves in a conflict of interest. "We rate every deal. It could be structured by cows, and we would rate it," a rating analyst wrote in September 2007. Meanwhile, investors blindly trusted the overly rosy assessments, which contributed greatly to the eruption of the financial crisis.
Of course, the notion of competition isn't the only motivation behind the French campaign for a European rating agency. Many a politician and professor sees Moody's and the other two agencies as a US instrument of power. Rudolf Hickel, an economics professor in the northern German city of Bremen, believes that the ratings agencies are incorporated into the "system of interests" of the American financial sector.
Do the agencies act as a beachhead for Wall Street? And by downgrading the ratings of European governments, are they even deliberately providing the ammunition for American euro speculators?
CANADA STOCKS-TSX jumps 2 pct on Europe news, S&P rally
"There seem to be some signs of improvement on the European credit side of things that's causing a little bit of optimism out there."
Spain, Belgium and Ireland all sold government debt at auctions that attracted solid demand and lifted some of the gloom over Europe's debt crisis. That helped the euro rally against the dollar and pushed some commodities higher.
"We got tired of listening to all this bad news and we're deciding to commit some funds into the market," he said.
Originally posted by Mdv2
If you don't agree with, tell me why Japan still has a triple A status with a debt/GDP ratio of almost 200% while the US and UK are not much better off than Greece. Especially if you consider the weight of the Japanese and US economy in comparison to the Greek economy.
Why of why are these countries spared from downgrades while Eurozone countries get downgrade after downgrade. This is deflection and market manipulation at its finest.
Originally posted by hotpinkurinalmint
One of the major drawbacks to the Euro is that countries with different levels of economic development and different economic activities are all on the same currency. Highly developed countries with highly skilled workforces like Germany have to share a fiscal policy with less developed countries like Greece.