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First, it was the overtly political game which S&P tried to play with the United States, and now Italy?
Standard and Poor’s rocked the euro and bond markets on Tuesday with a one-notch cut in Italy’s credit rating that added fuel to opposition calls for Prime Minister Silvio Berlusconi to resign and increased pressure on the debt-stressed euro zone.
S&P’s cut its ratings on the euro zone’s third largest economy to A/A-1 from A+/A-1+, judging it less creditworthy than Slovakia, and kept its outlook on negative, warning of a deteriorating growth outlook and damaging political uncertainty.
The euro fell more than half a cent against the dollar before picking up following some reassuring signs from Greece, but bond yields hovered within sight of levels which prompted the European Central Bank to step into the market and buy Italian bonds. (here)
Will this kill the Euro, and hurt the American economy which has now become much more invested in European banks thanks to loosening of the short-tern lending rules? What happens if the Euro fails? (More than likely, a lot of good things for the American dollar)
But, beyond that, is anyone else worried that S&P is playing politics?
Related articles
- S&P adds to euro stress with Italy cut (msnbc.msn.com)
- S&P cuts Italy ratings one notch, outlook negative (huffingtonpost.com)
- Italy downgrade adds to euro-zone turmoil (marketwatch.com)
- Italy criticizes S&P downgrade as political (seattletimes.nwsource.com)
- S&P Cuts Italy’s Rating, Citing Weak Growth (online.wsj.com)
