Posts Tagged ‘greece junk bond’

Standard & Poor’s Has Lowered Greece’s Government Debt to Junk Bond Status!

April 27th, 2010 Comments off

The Athenian financial tragedy continues on its inexorable path towards fiscal destruction. The ratings agency Standard & Poor’s has now officially downgraded Greek sovereign debt to junk status. Clearly, without a European Union and IMF bailout, Greece will default on its public debt. However, the terms of the potential saviours of Greece, namely reducing the deficit to GDP ratio of Greek government finances, are politically and socially unachievable without the collapse of the current government in Athens.

Even with a bailout, Greece will only survive on life support until its next fiscal crisis. In the meantime, Portugal is also on the brink, followed by Italy, Ireland and Spain, the so-called Eurozone PIIGS. Since it is mathematically impossible for Europe to bailout itself, it won’t be long before the collective European Union is reduced to junk bond status. In that eventuality, will the equally debt and deficit ridden UK and USA remain bystanders?