May 22, 2011

Greece default getting closer

It seems Greece is getting every day closer to bankruptcy.
Fitch Ratings has downgraded again Greece's Long-term foreign and local currency Issuer Default Ratings (IDR) to 'B+' from 'BB+ and the Short-term IDR remains at 'B'. All three ratings have been placed on Rating Watch Negative (RWN).
Norway today realized that supporting a bankrupt country was pointless at this stage and decided to stop providing financial aid which is clearly useless in the current situation.
This is not a major amount of money but certainly it is a clear signal to other countries that time has come to abandon the Titanic.
In the meanwhile Italy which was largely spared by rating agencies has been put in negative watch with possible downgrade. Another clear signal that things are turning very bad in the Eurozone, Italy has largely been ignored by rating agencies despite his stagnant economy and enormous debt due to the size of his economy and its importance in the eurozone, if rating agencies will start targeting Italy in the following months we can expect a major crisis to start immediately after, the big winner in all this mess would be the Dollar which could gain some value back from the demise of the Euro. Let us brace for another Lehman event before US Elections.
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