Euro falls after S&P downgrades France of AAA credit rating

January 15, 2012 by · Leave a Comment
Filed under: Credit News 

This may be the signal for another round of downgrades in the Euro zone.  With Germany, the Euro-star also seeing a reduction in GDP, could this be the signs of a recession?  It has been quite quiet in the Euro-zone over the last 6 weeks with many analysts wondering what would trigger more downward pressure.   Too much complacency in my opinion, yes it is a election year in the United States but we have not gotten our house in order and many parts of the world have just been masking the problems, not addressing them in any meaningful fashion.

Look to see how markets open in the U.S. on this news, if we see a sharp sellout, it could be a sign for more things to come.

Bloomberg:
The euro fell in early Asia-Pacific trading after Standard & Poor’s stripped France of its top credit rating and cut eight other euro-zone nations, magnifying concern the region’s financial turmoil will intensify.  The shared currency depreciated in each of the past six weeks against the dollar, dropping to a 16-month low. European leaders are divided and falling behind in their response to the sovereign-debt crisis, Frankfurt-based Moritz Kraemer, S&P’s managing director of European sovereign ratings, said on a Jan. 14 conference call.

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After U.S. loses ‘AAA’ credit, UK and France under review

August 9, 2011 by · Leave a Comment
Filed under: Credit News 

We don’t deserve ‘AAA’ credit status with the large amount of deficit spending with no real end in sight.  I am very surprised so many people that came out to rail against S&P’s decision (which I agree with) to bring down our creditworthiness a single notch.  Its not like we can not regain that coveted position but we need to some our generous creditors that we have our house in order.

UK and France will need to be brought down a notch as well, they both have structural changes then need to implement so reform their quasi-welfare state.  In the first world countries we seem to have all come into a phase where we are hooked on entitlements across the board.   There is nothing inherently bad about entitlement programs, the issue is that we are selling ourselves as this capitalist utopic enclave for all the world to want to do business in.  That will not mesh when a smaller working population over the next 20-40 years has to carry the burden for all these commitments that older generations made for them.   Taxes will have to rise by a massive amount if we keep these programs intact by current standards.

That is going to kill innovation when the innovators that are being asked to create the jobs of the future are also going to be asked to give most of their profits to support our own homegrown welfare state.   I am sorry but this is America where you can make it if you work hard and are a little clever.  Not America where as long as your were born here we nanny you from cradle to grave.  What I am suggesting is that we should just find a cutoff line for all of these major entitlement programs and then create either a stripped down alternative or none at all.

We keep our promises to our retirees and people close to that phase of their life.  But the younger generations (myself included), should not be sold the idea that those programs are here for us.  They are unsustainable and we could use those resources over time to put more effort into educating our population, help funding new ventures and providing support services to new families so the parent(s) can have a lucrative job that will provide for that family.  That is the root of our problem, we lack the creation of real opportunity in America and this is the issue that needs to be dealt with over the next 50-100 years along with addressing our energy policy.   I am still hopeful but I fear will need to undergo a massive crisis to get us all unified to deal with these complex and difficult issues that we face.

Reuters – France and Britain are most vulnerable within Europe to a rating review following the U.S. downgrade, with anemic growth and hefty borrowing placing them among the shakiest of the world’s triple-A rated lenders. Both countries have stable rating outlooks, making a sudden downgrade unlikely and markets have been so impressed by Britain’s debt-cutting strategy that they have pushed its bond yields to record lows.

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