Report: S&P to place all 17 Euro nations on downgrade warning

posted at 4:30 pm on December 5, 2011 by Tina Korbe

Ahead of a planned summit of European Union leaders, the credit rating agency Standard & Poor’s has put all 17 Euro nations on review for a credit downgrade, which means France and Germany could lose the pristine AAA ratings they presently enjoy, Bloomberg News is reporting.

The euro area’s six AAA rated countries are among the nations to be placed on a negative outlook pending the result of a summit of European Union leaders on Dec. 9, the people said today on condition of anonymity because the decision has yet to be announced. The euro reversed its gains and U.S. Treasuries rose after the Financial Times reported earlier that the credit-ranking firm planned to reduce six AAA outlooks, without citing the source of the information. John Piecuch, a spokesman for S&P in New York, had no comment.

The downgrade warnings come as German Chancellor Angela Merkeland French President Nicolas Sarkozy push for a rewrite of the EU’s governing rules to tighten economic cooperation in a demonstration of unity on ending the debt crisis. With the fate of the currency shared by the 17 euro countries at risk, Merkel and Sarkozy presented a common platform for a Dec. 8-9 summit of EU leaders in Brussels that aims to halt the crisis now in its third year.

“Negative news is going to continue to spur rallies in the Treasury markets, at least until the ECB steps in to end this mess once and for all,” said Guy LeBas, chief fixed-income strategist at Janney Montgomery Scott LLC in Philadelphia. “S&P can serve to spook the markets, but I don’t think we’ll see any fresh policy action based solely on a ratings agency’s opinion.”

Frankly, as was the case this summer when S&P put the United States on downgrade review (prior to actually downgrading the nation), the S&P rating of these Euro nations matters far less than the actual fiscal state of affairs. The European debt crisis is nothing new — and, as with the United States’s debt crisis, the solutions are obvious, but difficult. What’s called for is a wholesale reform of the various member nations’ entitlement states.


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S&P: Doing the job that government won’t.

BobMbx on December 5, 2011 at 4:34 PM

And who is surprised by this?

My question to savvy investors here, why does anyone hold any bond from any government entity at this point? Aren’t they all broke and at risk? State, local, federal and international?

karenhasfreedom on December 5, 2011 at 4:35 PM

If everyone is a bad risk, no one is.

lorien1973 on December 5, 2011 at 4:35 PM

What’s called for is a wholesale reform of the various member nations’ entitlement states.

That simply isn’t going to happen. They will need a baseball bat to the back of the head to get them to back away from the public trough. An economic collapse will be that baseball bat.

sharrukin on December 5, 2011 at 4:36 PM

Money has to go somewhere….which is why I believe the US isn’t in MUCH worse shape yet.

search4truth on December 5, 2011 at 4:37 PM

Buy gold. Now.

abobo on December 5, 2011 at 4:39 PM

Money has to go somewhere….which is why I believe the US isn’t in MUCH worse shape yet.

search4truth on December 5, 2011 at 4:37 PM

Money can also vanish. Just ask Zimbabweans, home owners, or bank investors in 2008.

sharrukin on December 5, 2011 at 4:43 PM

Even after we bail them out? So what if we don’t have any money.

Cindy Munford on December 5, 2011 at 4:44 PM

abobo on December 5, 2011 at 4:39 PM

I can’t afford gold, I’m sticking with food.

Cindy Munford on December 5, 2011 at 4:45 PM

This EFSF, of course, was just another effort in avoiding reality. The northern Euro Zone members want to continue to export to these countries, but they cannot do that and that is why they have no money. They are finding that collectivism doesn’t work. There is no such thing as collective responsibility. These new world order geniuses forget that when you have austerity GDP falls and you have a recession. In addition, it also brings about added inflation, which had and has the ECB very concerned, because their mandate is to keep inflation in check. This then has put the ECB at cross-purposes. This points out why the ECB does not want to act as lender of last resort to governments.

Bob Chapman, International Forecaster

maverick muse on December 5, 2011 at 4:48 PM

Even after we bail them out?

Cindy Munford on December 5, 2011 at 4:44 PM

And, the stock market soared on the news?

Fallon on December 5, 2011 at 4:50 PM

When Euro leaders meet, do they take trains or planes to get to their meeting?

WashJeff on December 5, 2011 at 4:51 PM

I can’t afford gold, I’m sticking with food.

Cindy Munford on December 5, 2011 at 4:45 PM

Excellent. And WATER.

As per poor man’s version of precious metals, exchange $20/for a roll of nickles at your bank. They are worth more than $.05/each, and will always trade well for goods/services.

maverick muse on December 5, 2011 at 4:52 PM

Gold got a small drop – $1740 to $1720 today. Small margin call?

Long had a “Mormon pantry” Cindy. Then there is my “lead stash”.

Caststeel on December 5, 2011 at 4:53 PM

Gold got a small drop – $1740 to $1720 today. Small margin call?

Caststeel on December 5, 2011 at 4:53 PM

My investor told me yesterday that he thinks gold will be going down in the short term, unless there is a collapse like 2008 and then all bets are off.

sharrukin on December 5, 2011 at 4:56 PM

Cindy Munford on December 5, 2011 at 4:45 PM

Actually- bottled water, batteries, and ammunition are the best currencies of first resort in any real emergency. I literally include them in my portfolio.

abobo on December 5, 2011 at 4:56 PM

sharrukin on December 5, 2011 at 4:56 PM

Gold is illiquid in any short term emergency, who can afford it’s true cost? But for large capital purchases after a collapse, that’s here it’s at!

abobo on December 5, 2011 at 4:58 PM

Fallon on December 5, 2011 at 4:50 PM

I know, those folks with stocks are so much more global than I am. I’m unsophisticated enough not to want to spend what we don’t have.

Cindy Munford on December 5, 2011 at 4:59 PM

“(prior to actually downgrading the nation)”

“Oh yeah…

… I forgot!” – MSM/libtards/Obowma/Frank

/

Seven Percent Solution on December 5, 2011 at 4:59 PM

Good tips, friends. In the long run I don’t have enough money to by much of any of it.

Cindy Munford on December 5, 2011 at 5:00 PM

Wow! That’s really going to piss off the Germans!

GarandFan on December 5, 2011 at 5:02 PM

Gold is illiquid in any short term emergency, who can afford it’s true cost? But for large capital purchases after a collapse, that’s here it’s at!

abobo on December 5, 2011 at 4:58 PM

That means you need enough cash to park it in gold to later make those capital purchases. Wish I could.

sharrukin on December 5, 2011 at 5:06 PM

As usual, S&P is late on making the call.

huckleberryfriend on December 5, 2011 at 5:47 PM

(Manufactured)

C R I S I S

A L E R T !!!!!!

I’m certain this won’t go to waste, to paraphrase some damn crook.

hillbillyjim on December 5, 2011 at 7:49 PM