Moody's cuts Spain's credit rating sending its repayments skywards

[caparo]

Moody's has cut Spain's credit rating by another notch, escalating the ongoing debt crisis in the eurozone.

Spain's rating was downgraded to Aa2, Moody's third highest rating, but this was enough to force up bond yields and greatly increase the cost that Spain has to pay to finance its debt mountain.

The cost of insuring government debt issues by Spain, Greece and Portugal all widened following Moody's move, according to Markit.

 

"The rating agencies have often been on the sidelines during the sovereign debt crisis. But this week they have shown that they can still move markets. Greece received a multi-notch downgrade from Moody's on Monday and now Spain has been cut one notch to Aa2 by the same agency," said Gavan Nolan, Markit's director of credit research.

 

Moody's was of course one of the credit rating agencies that had threatened to downgrade the UK's rating. Had this happened the UK would also have a massively increased cost of financing our own debt mountain. Fortunately the crisis was aleviated when the government anounced its spending cuts.

[Bulgarian]

Spain should get an account at CreditExpert, they claim to be able to improve your credit rating.

 

Perhaps Iceland stole Spains identity and used it's credit card to buy loads of stuff on credit ?

[lobster]

its not surprising really , no one in the eurozone is actually doing enough to alleviate the debt problem . greece made all the right noises but hasn't really done anything , ireland is a total basket case and it will take generations just to return them to abject poverty, portugal has made the effort but is not significant in the eurozone to make a difference , spain have their heads up their backsides hoping that the whole thing will go away, no one really wants to admit there is a problem in which case they don't have to do anything to solve it . and waiting in the wings belgium and biggest of all the most corupt government in western europe Italy .italy had budget deficiets before they joined the euro ,they fudged the figures so that they would be allowed in . they all used to solve their problems by devaluation, now stitched up by the germans who were peed off at being undercut particularily on motor vehilces they are in the euro and can't devalue

[Vague_Boy]

its not surprising really , no one in the eurozone is actually doing enough to alleviate the debt problem

 

Perhaps like some on here they feel that debt is somehow not a problem. Somehow we'll muddle through and hey, it's only money after all. We'll just print a load and pay our bills that way, what could possibly go wrong?

 

The Greeks felt like that, as did the Irish, the Portugese and the Spanish.

 

Did it work out for them?

 

No.

 

 

The UK controls its own currency. The government can print money and inflate its way out of debt, rather than defaulting. As long as this doesn't get completely out of control (hyperinflation), it might be preferable to the alternative.

 

LINK

 

Unless of course you're a saver, have a pension that isn't index linked or aren't getting a pay rise that matches inflation.

[Rupert_Baehr]

its not surprising really , no one in the eurozone is actually doing enough to alleviate the debt problem . greece made all the right noises but hasn't really done anything , ireland is a total basket case and it will take generations just to return them to abject poverty, portugal has made the effort but is not significant in the eurozone to make a difference , spain have their heads up their backsides hoping that the whole thing will go away, no one really wants to admit there is a problem in which case they don't have to do anything to solve it . and waiting in the wings belgium and biggest of all the most corupt government in western europe Italy .italy had budget deficiets before they joined the euro ,they fudged the figures so that they would be allowed in . they all used to solve their problems by devaluation, now stitched up by the germans who were peed off at being undercut particularily on motor vehilces they are in the euro and can't devalue

 

You think?

 

Why would the Germans wish to devalue their currency? Do they have a problem in exporting their manufactured goods? - If so, that's news to me.

 

If the PIIGS (Portugal, Italy, Ireland, Greece and Spain) can't get their act together, then is it not feasible that they may be required to leave the Eurozone?

 

There were rules - very strict rules - when the Euro was launched. The PIIGS (and possibly others) broke those rules. They reneged on the deal and the more responsible countries in Europe might just hold their noses to the grindstone.

 

The Greek bailout was not very popular in Germany. I doubt they will get a second chance.

 

At the moment, the fiscally-irresponsible countries in the Eurozone have the remainder to provide a cushion. That could always change.

 

The UK took drastic steps to reduce its deficit and as a result, maintained its credit rating. Should the country reverse course and should its credit rating fall, then it can rely on the Sterling zone for support.

 

There might be a few more bargains going for foreign investors prepared to accept a high risk.

[lobster]

QUOTE=Rupert_Baehr You think?

 

.

 

If the PIIGS (Portugal, Italy, Ireland, Greece and Spain) can't get their act together, then is it not feasible that they may be required to leave the Eurozone?

 

(the euro zone could stand the loss of portugal ireland and greece , but not spain and italy . the euro would not survive )

 

There were rules - very strict rules - when the Euro was launched. The PIIGS (and possibly others) broke those rules. They reneged on the deal and the more responsible countries in Europe might just hold their noses to the grindstone.

 

(and every one broke them including the french and germans . there was no political will to enforce these rules the figures were fudged to allow italy to join)

 

 

The Greek bailout was not very popular in Germany. I doubt they will get a second chance.

( they may have to )

 

At the moment, the fiscally-irresponsible countries in the Eurozone have the remainder to provide a cushion. That could always change.

 

(WTF)

 

The UK took drastic steps to reduce its deficit and as a result, maintained its credit rating. Should the country reverse course and should its credit rating fall, then it can rely on the Sterling zone for support.

 

(the UK cuts were a step in the right direction but we have been on borrowed time for years . Margaret Thatcher bought some time with her privatisations and gordon browns property boom and asset inflation was the last throw of the dice )

[Bigthumb]

It made me smile when the UK lent money to Ireland. Because Irelands credit rating had been downgraded it was costing them north of 6% to finance their loans. The UK on the other hand had just had its AAA credit rating restored and was down to around 3.5% of its debts. So the UK lent Ireland money that the UK themselves owed but at a better rate of return than it was paying.

 

You couldn't make it up.:hihi:

[danny11]

3.5% of £150000000000000000000 is still a lot of money

[HeadingNorth]

It made me smile when the UK lent money to Ireland. Because Irelands credit rating had been downgraded it was costing them north of 6% to finance their loans. The UK on the other hand had just had its AAA credit rating restored and was down to around 3.5% of its debts. So the UK lent Ireland money that the UK themselves owed but at a better rate of return than it was paying.

 

You couldn't make it up.:hihi:

 

That's the whole principle of banking; borrow money from somewhere, and lend it to someone else at a higher interest rate than you're paying.

 

It's the same principle as taking out a mortgage in order to invest. Mortgages are usually the cheapest possible form of borrowing.

[Grandad.Malky]

its not surprising really , no one in the eurozone is actually doing enough to alleviate the debt problem .

 

An interesting read but you forgot to add why its all Labours fault, we all know the current financial problems are Labours fault don’t we or is that just propaganda from our coalition Tory posters