http://www.telegraph.co.uk/finance/debt-crisis-live/9271371/Debt-crisis-as-it-happened-May-17-2012.html
The downgrade of Greece's sovereign ratings reflects the heightened risk that Greece may not be able to sustain its membership of Economic and Monetary Union (EMU). The strong showing of 'anti-austerity' parties in the 6 May parliamentary elections and subsequent failure to form a government underscores the lack of public and political support for the EU-IMF EUR173bn programme.
We take note that elections have been called, and we look forward to being in contact with the new government once it has been formed.
UniCredit dropped 7.09pc, Banca Monte dei Paschi di Sienalost 6.89pc and Intesa Sanpaolo was down 4.32pc.
I told the Greek government two years ago in Athens that they had no option but to default and devalue. At the time this was an unusual view and I was attacked on prime time Greek TV by the leader of the Communist party as ‘irresponsible’ To be frank that didn’t worry me much – if the Communists think you are irresponsible you must be getting something right…Because of the failure to address the problems caused by the euro early enough these problems are now worse and the options have been reduced.
18.39 Fitch added that ALL eurozone countries would be put on "Rating Watch Negative" if, "following the Greek elections Fitch assesses that the risk of a Greek exit from EMU is probable in the near term."
In layman's terms, this means that if a stable, pro-bail-out government is not formed after June's elections, there is a greater than 50pc chance that all eurozone countries could be downgraded within six months.
18.32 Fitch is trying to steal Moody's thunder. The ratings agency has just downgraded Greece to CCC - i.e., from junk to...well, junk. In a statement, Fitch said:
The downgrade of Greece's sovereign ratings reflects the heightened risk that Greece may not be able to sustain its membership of Economic and Monetary Union (EMU). The strong showing of 'anti-austerity' parties in the 6 May parliamentary elections and subsequent failure to form a government underscores the lack of public and political support for the EU-IMF EUR173bn programme.
In the event that the new general elections scheduled for 17 June fail to produce a government with a mandate to continue with the EU-IMF programme of fiscal austerity and structural reform, an exit of Greece from EMU would be probable. A Greek exit would likely result in widespread default on private sector as well as sovereign euro-denominated obligations, despite a moderate sovereign debt service burden following the restructuring of Greek government bonds in March.
15.37 The IMF has said it will hold off on official contact with Greece until it's held new elections. Spokesman David Hawley said:
We take note that elections have been called, and we look forward to being in contact with the new government once it has been formed.
13.50 There are protests in Frankfurt today, with the banners below calling for a rejection of the EU fiscal agreement. A loose collection of protesters from different groups have formed a "blockupy" camp that aims to bring Frankfurt's banking district to a standstill.
12.34 It's not just Bankia that's having a bad week: Italian bank shares are also plunging on growing worries over the debt crisis.
UniCredit dropped 7.09pc, Banca Monte dei Paschi di Sienalost 6.89pc and Intesa Sanpaolo was down 4.32pc.
09.38 The Centre for Economics and Business Research predicts that a Grexit could cost the global economy $1,000,000,000,000 (that's a trillion, by the way). Chief executive Douglas McWilliams writes:
I told the Greek government two years ago in Athens that they had no option but to default and devalue. At the time this was an unusual view and I was attacked on prime time Greek TV by the leader of the Communist party as ‘irresponsible’ To be frank that didn’t worry me much – if the Communists think you are irresponsible you must be getting something right…Because of the failure to address the problems caused by the euro early enough these problems are now worse and the options have been reduced.
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