I hear that Standard & Poor have cut Greece's credit rating to CCC, the lowest in the rated world. To give you an idea of how Greece's likelihood of repaying debt is viewed, that rating places Greece below Pakistan (a country in a state of near civil war) and Jamaica. Standard & Poor says that it believes there is a higher likelihood that Greece will see one or more defaults over the next 12 months than not.
The Greek government is trying to push through austerity measures whilst Greek 'workers' complain in the streets; apparently they don't see why they should have to work beyond their mid 50s like workers in the rest of the EU. It also seems that the Germans are getting fed-up with throwing money at the feckless Southern EU countries (and Ireland) whose massive increase in living standards have come largely as a result of EU transfers of money from Germany, the UK and some other mostly North and West European countries.
Meanwhile the whole EU, the eurozone countries and the IMF are in discussions over a second bailout for Greece; this time one expected to total up to €120bn. The talks have hit a problem as the German government has decided that it will not keep footing the bill and is insisting on the involvement of private investors. Somehow I doubt that private investors will chip-in.
So if Greece is more than likely to default on its debt within 12 months, where does that leave the EU and the UK in particular? The EU project of ever-closer union needed monetary union as a precursor to full union. The Sovereign debt crisis affecting chiefly Greece at present but also Ireland, Portugal and Spain may cause the splitting of the Eurozone into two strands of countries; in effect the solvent and the insolvent. In a sensible world this should mean the end of the EU's ever closer union but the leaders of the EU project do not live by sensible rules and they are more likely to say that the debt problems require closer union.
One thing that I have not heard is an acceptance that those of us who argued that the Eurozone project with its single currency would not succeed because of the impossibility of running a single currency to suit the needs of such disparate countries were correct and the Euro-enthusiasts were wrong, very wrong. I have heard not even a whiff of an apology from Tony Blair, the multitude of Lib Dems who supported it or especially the BBC who gloried in portraying us EU-realists as 'Little Englanders' at best and raving xenophobes at worst. Come on BBC apologise, you got it wrong and in any case you should not have taken sides. I suppose the EU money you receive may have helped sway your coverage though...
The Greek government is trying to push through austerity measures whilst Greek 'workers' complain in the streets; apparently they don't see why they should have to work beyond their mid 50s like workers in the rest of the EU. It also seems that the Germans are getting fed-up with throwing money at the feckless Southern EU countries (and Ireland) whose massive increase in living standards have come largely as a result of EU transfers of money from Germany, the UK and some other mostly North and West European countries.
Meanwhile the whole EU, the eurozone countries and the IMF are in discussions over a second bailout for Greece; this time one expected to total up to €120bn. The talks have hit a problem as the German government has decided that it will not keep footing the bill and is insisting on the involvement of private investors. Somehow I doubt that private investors will chip-in.
So if Greece is more than likely to default on its debt within 12 months, where does that leave the EU and the UK in particular? The EU project of ever-closer union needed monetary union as a precursor to full union. The Sovereign debt crisis affecting chiefly Greece at present but also Ireland, Portugal and Spain may cause the splitting of the Eurozone into two strands of countries; in effect the solvent and the insolvent. In a sensible world this should mean the end of the EU's ever closer union but the leaders of the EU project do not live by sensible rules and they are more likely to say that the debt problems require closer union.
One thing that I have not heard is an acceptance that those of us who argued that the Eurozone project with its single currency would not succeed because of the impossibility of running a single currency to suit the needs of such disparate countries were correct and the Euro-enthusiasts were wrong, very wrong. I have heard not even a whiff of an apology from Tony Blair, the multitude of Lib Dems who supported it or especially the BBC who gloried in portraying us EU-realists as 'Little Englanders' at best and raving xenophobes at worst. Come on BBC apologise, you got it wrong and in any case you should not have taken sides. I suppose the EU money you receive may have helped sway your coverage though...
3 comments:
Let's hope that Standard & Poor are correct, but they could be over-reacting because the rating agencies missed the impending bank crisis and thus don't want to be caught out twice.
As membership of the EU seems to be no more popular amongst the general public in Germany than the UK, their government will certainly have problems giving any further support for the Euro, particularly as the Germans tend to be more keen on having savings than we do in Britain.
A Greek default could be the beginning of the end, not just for the Euro, but the whole EU.
"Lowest rated in the world" doesn't mean as much as you might think. Most countries aren't rated because they don't issue bonds. it really means Greece, a former bond issuer, has fallen the furthest.
Alex: Thanks for that, I was wondering why Grenada and Jamaica were so lowly placed. How will Scotland be rated when it starts issuing bonds soon?
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