Wednesday, March 16, 2011

MOODY to PORTUGAL - WE ARE ALSO DOWNGRADING YOU

Banco de Portugal
No matter how hard you try, the dark shadows won't leave you, they will always be around. I Guess this suits well for the member states of European Union. They had invested and invested, and borrowed and borrowed, and are still borrowing, but this is not to make palaces, but to make sure that that palace isnt sold to pay back for the bricks bought to make that palace. I personally feel sad for the people of the nations, who are still not out of the state of financial crisis, which stated years back. In fact, from 1980s..



But there is something to be happy for Portugal, atleast they aren't downgraded to speculative grade, and are still on the investment grade

Anyways, Moody's has downgraded Portugal s sovereign debt from A1 to A3, holding the negative outlook, as the economy might need an international bailout like its other countries such as Greece and Ireland. 

Prime Minister Jose Socrates
What's more interesting to note here is that Portugal's Prime Minister Jose Socrates also said that he would quit if the Parliament and opposition doesn't supports the austerity plan that has been planned in place, to overcome the rising public debt and plan the future of this ailing economy. He has said this, and i have started thinking that does it even matter at this stage if he stays or not.

So this news is a tool to furthure dampen Portugal situation in the international markets, when it is planning to to raise up to 1bn euros, via a 12-month treasury bill auction. Portugal’s ten-year bond rose 0.04 percentage point to 7.44 percent today as well, as investor face increasing risk on the future prospects of Portugal being able to pay back all this. It also added to the sliding of Euro

The prime minister has warned the country could face a bail-out.
"The consequence of a political crisis would worsen the risks for our economy and lead to intervention."
Moody in a statement said that,
"The cost of market funding is likely to remain high until the deficit has been reduced to a sustainable level and the prospects for economic growth have improved,"
So the more derivatives that got traded, the more loans that were issued and the more securitization that as done, has led to the collapse of yet another country. So It would helped if their regulators had had done a better job before, rather than making sure that their accounts got filled in with cash, they should have also showed concern on whether, the accounts of their countrymen were safe as well.
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