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Europe - from junk to junk

The Greek junk it seems is influencing others. Atleast the rating agencies. Portugal has been slapped with double reduction, with possibly more to come. S(pain) journey has just started. UK is also a big threat. Outside of this, a country not in the limelight but possibly on the threshhold, is Italy. A budget deficit of 5% (much above the Maastricht requirement of 3%, debt to GDP ratio of nearly 124% and maturing debt to be due for repayment this year amounting to close to 17% of 2009 GDP is a disaster in the making.

Europe is now not only on the throes of sovereign rating disaster, but the European banking system is also in for one. This is revealed by the exposure that the banking sector of Germany, France and UK has in the PIGS (Portugal, Italy, Greece and Spain). 

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Source: BIS

Clearly the drama in Europe is just starting to unfold.

Posted by Kunal Kumar Kundu on April 29, 2010 11:02 AM |

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