Wednesday, 9 December 2009

Greek Debt Downgraded

As I predicted Greek debt has been down graded from A to BBB+ by Fitch, the smallest of the rating agencies. They say this reflects "concerns over the medium term outlook for public finances given the weak credibility of fiscal institutions. I would expect the rating to go down further to BBB. If it drops another 3 notches to BB- it cannot be used as collateral in the ECB' Repo operations, ie its only use is as toilet paper.

Fear not, EU commissioner Almunia is ready to ride to the rescue with officials to help the country get to grips with is budget deficit. So the EU will run Greek economic policy. Can the UK be far behind?

Downgrades come not singly but in battalions at least for Dubai state linked company bonds. Bad news for their bond holders so step forward Lloyds TSB, Barclays etc. Time for Super Brown to get his underpants on over his trousers. Meanwhile the Japanese fiscal crisis staggers on. Its as long running as the Mousetrap in the West End and shows just how long bank crises take to fix.

Our very own Darling Mr Badger announced this afternoon another host of 'tough' decisions. Are there any other sort in LibLabCon speak? No brainers would let us all sleep at night but as none take effect until after the Election there is no immediate need for the sleeping pills.

Meanwhile the Irish have got the hair shirts on in a big way. They have cut child benefit by 10% and Reuters state,

"The salary of the prime minister will be reduced by 20 percent. This reduction, together with the pension levy means the prime minister's salary will be cut by close to 30 percent in total. Ministers and Secretaries General of Government Departments will take a pay cut of 15 percent: an overall cut of close to 25 percent when the pension levy is taken into account."


The obviously don't want to end up like Greece with Mr van Rumpy or La Ashton sent over to run Ireland properly. Seriously they really have made difficult decisions starting with the fat cats at the top. I applaud them. Would that we would do the same starting with the self satisfied, smug BBC.

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