Global News Journal
Beyond the World news headlines
Credit rating agencies cannot win.
They were blamed for carelessness before the crisis, handing out over-generous ratings on the packets of mortgage-backed securities that subsequently unravelled, sending the global economy into a spin and leading to Lehman Brothers collapse. Now they are being criticised again, this time for being too cautious, by dishing out rating downgrades to countries in Europe being sucked into Greece’s debt crisis.
Standard & Poor’s recently downgraded Spain’s rating one notch to AA, warning that the outlook was bleak for the euro zone’s fourth biggest economy. Struggling Greece has also been marked down — to junk status — and now hovers close to Pakistan and Venezuela in the credit stakes. Portugal is another country to be singled out for downgrades from the leading ratings companies.
It’s all little too much for the European Union, which worries about the downgrades creating a vicious spiral that exacerbates the crisis rather than helping to stall it.
Yesterday, the European Commission warned the rating agencies to watch their step.
How do you get from Helsinki to Milan when the whole of the airspace in northern Europe is closed?
Well, I did it and what’s more – most of the journey was done by plane.
The surge in the spread of Greek bond yields over German ones since European leaders issued a promise of emergency loans to Greece last month indicates financial markets do not believe the pledge of euro zone support is anything more than a bluff.
And they are itching to call it.
Euro zone leaders have been betting that a promise of loans to Greece and strong words of political support will be enough to calm markets and allow Athens to borrow at more reasonable rates, therefore rendering any real aid — the dreaded bailout — unnecessary.
Dark smoke covered the Athens sky over the weekend, its thick plumes rising over the Acropolis and rekindling memories of the huge, deadly fires of 2007 that nearly cost Greece’s ruling conservatives their re-election.
For Athenians glued to TV pictures of frantic residents trying to battle flames reaching their backyards with buckets and garden houses, it was much more than a dramatic struggle to rescue property.