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EU leaders attack S&P After ratings warning

Posted by seumasach on December 6, 2011

Hans Michelbach, a member of parliament for the conservative Christian Social Union party, the Bavarian sister party to Merkel’s Christian Democrats, called the S&P warning “an arbitrary decision with no relation to reality.” The aim of the announcement, he said, had evidently been to create additional nervousness ahead of the EU summit. He called on the EU to crack down on the “uncontrolled games” being played by the ratings agencies.

As the UK and US economies disintegrate they continue their campaign to undermine the euro and despite overwhelming, irremedial indebtedness continue to benefit from the indulgence of the rating agencies which are controlled by Wall Street/City of London interests

Spiegel

6th December, 2011

Ratings agency Standard & Poor’s has piled pressure on EU leaders to come up with a deal to save the euro at their summit on Thursday, warning that it may downgrade 15 of 17 euro-zone countries — including powerhouse Germany. EU politicians have criticized the agency’s statement, and are particularly unhappy about its timing.

European share prices and the euro fell on Tuesday after ratings agency Standard Poor’s warned it may downgrade 15 of the 17 euro-zone nations, including triple-A nations like Germany, as a result of the euro crisis.

 

 European policymakers criticized the timing of the announcement, just three days ahead of a make-or-break EU summit on Thursday and Friday, and said the agency hadn’t taken into account proposals for far-reaching reforms of the euro zone’s debt rules agreed by the leaders of France and Germany on Monday.

 

Standard & Poor’s had warned late on Monday that it may carry out an unprecedented mass downgrade of euro-zone countries if EU leaders fail to reach an agreement on how to solve the debt crisis at this week’s summit.

Luxembourg Prime Minister Jean-Claude Juncker said the S&P announcement was “like a knockout blow” to countries that were cutting their budget deficits.

“I find what Standard & Poor is saying completely exaggerated,” Juncker said in an interview on Deutschlandfunk radio early on Tuesday. “I have to wonder that this news reaches us out of the clear blue sky at the time of the European summit; this can’t be a coincidence.”

Merkel, Sarkozy Insist Fiscal Union Will Work

German Chancellor Angela Merkel and French President Nicolas Sarkozy responded in a joint statement late on Monday that they “took note” of the move by S&P, while both countries “reinforce their conviction” that common proposals for closer fiscal union in the European Union will “strengthen coordination of budget and economic policy,” and promote stability and growth.

French Finance Minister Francois Baroin said S&P had not factored in the French-German plan to overcome the crisis that was announced on Monday, and said France required “no third savings program” and “no further measures.”

The S&P warning piles pressure on the EU leaders to agree on a convincing strategy. On Monday, Merkel and Sarkozy agreed to propose changes to the EU treaty to impose budget discipline across the euro zone through automatic sanctions and balanced-budget legislation in national member states.

At their meeting in Paris, they also proposed bringing forward the establishment of the permanent euro bailout fund, the European Stability Mechanism, to 2012 from 2013. Both again ruled out the introduction of euro bonds.

Bank of France governor Christian Noyer, a member of the governing council of the European Central Bank, said on Tuesday that ratings agencies were in danger of themselves worsening the euro-zone debt crisis.

“The agencies were one of the motors of the crisis in 2008. Are they becoming a motor in the current crisis? That’s a real question we all need to think about,” he told a conference on corporate finance in Paris.

Hans Michelbach, a member of parliament for the conservative Christian Social Union party, the Bavarian sister party to Merkel’s Christian Democrats, called the S&P warning “an arbitrary decision with no relation to reality.” The aim of the announcement, he said, had evidently been to create additional nervousness ahead of the EU summit. He called on the EU to crack down on the “uncontrolled games” being played by the ratings agencies.

Cyprus was left out of the S&P warning because its credit rating is already under examination. Greece, too, was not included as it already has the worst credit rating of any country in the world.

Barroso Drops Call For Eurobonds

 

European Commission President Jose Manuel Barroso said on Tuesday that it was likely to take four or five months for the European treaty changes to come into force.

 

In an interview with German newspaper Die Welt, Barroso dropped his demand for euro bonds, saying they were not a solution to the current crisis. “Joint sovereign debt requires a much higher level of integration and discipline within the euro zone, which we haven’t reached at the moment,” he said.

He added that Germany’s angry reaction last month to an EU consultation paper on euro bonds had surprised him.

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