Greeceâs financial difficulties escalated on Monday after it was warned of a possible credit rating downgrade and Jean-Claude Trichet, European Central Bank president, said Athens would have to act âcourageouslyâ to bring its budget under control. Interest rates on Greek bonds surged back close to their highest levels for seven months after Standard & Poorâs put Greeceâs A minus credit rating on ânegative watchâ, which usually leads to a downgrade within a month. Separately, Mr Trichet hinted that action taken by the new Greek government was not yet enough to bring the crisis under control. Calling Greeceâs situation âvery difficultâ, he told the European parliament âwe all know the very important and courageous decisions that will have to be takenâ. http://www.ft.com/cms/s/0/f9b2c120-e36c-11de-8d36-00144feab49a.html What about a currency devaluation ? Oopss, my error. Greece is EU. Ay, ay, ay...
Moodyâs Investors Service said its top debt ratings on the U.S. and the U.K. may âtest the Aaa boundariesâ because their public finances are worsening in the wake of the global financial crisis. The U.S. and U.K. have âresilientâ Aaa ratings, as opposed to the âresistantâ top ratings of Canada, Germany and France, analysts led by Pierre Cailleteau said today in a report. None of the top-rated countries is âvulnerable,â or have public finances that are âstretched beyond the point of âno returnâ to the Aaa category,â New York-based Moodyâs said. http://www.bloomberg.com/apps/news?pid=20601087&sid=ah7iujnjVo8o&pos=2
I don't need to see pictures... I am staring at 5Y Greece cheapening arnd 50bps to Germany today. I have to say this is where I get tempted, against my better judgement...
What would happen should Greece default? To the Euro? To other Euro zone countries in bad shape? Will Germany step in? The IMF?