June 15, 2010

Ouch: Moody downgrades Greek debt to junk status

Another scare for europe as Moody pushes Greek debt to junk status, via Wall Street Journal:

" Moody's Investors Service downgraded Greece's debt rating by four notches to Ba1 from A3, after a similar move by Standard & Poor's in April."

This isn't exactly welcome news, but it does help the argument that Greece will ultimately have no way out except default and/or shedding the euro and going back to a currency (the drachma) they can control. But Michele Maatouk also at Wall Street Journal reports it differently:

"...the negative market impact was tempered by the fact that the move by Moody's was partly a catch up to S&P's junk status for Greece whilst Moody's also noted that a debt restructuring could be avoided," said Credit Agricole.

...Traders said the move, while not surprising, served to reignite fears about sovereign debt on a day when investors were beginning to regain confidence in the global economy after better-than-expected euro-zone industrial production data."

The downgrade means the Greek debt is now off limits to various pension funds and investment portfolios with 'stability' requirements.

The Drachma

Plan B - return to Drachma with Alekos Alavanos - May 2013

Talk of default / Drachma rebirth heats back up - March 7, 2011

Rumors of Drachma return grow - Nov 2, 2011

Could the drachma save Greece? - June 6, 2010

Related:

2011 – Creating the European Financial Stability Facility (EFSF) & the "PIIGS"

2017 – Another Greek Economic Crisis?

Tourism in Greece

The Drachma almost returned to Greece 2013–2017

Greek economic Survival in the 1990s

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