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Germany, France May Hurt AAA Ratings in ‘Ponzi Game’

Posted By admin On May 11, 2010 @ 6:11 am In Money Watch | Comments Disabled

John Glover
Bloomberg News [1]
Tuesday, May 11, 2010

May 11 (Bloomberg) — Germany and France are among top- rated euro-area states that may compromise their AAA grades by standing behind the debts of weaker members with their 750 billion-euro ($955 billion) stabilization fund.

The package is “making debt profiles deteriorate, potentially damaging the ratings of core sovereigns,” said Stefan Kolek, a strategist at UniCredit SpA in Munich. “It’s a kind of Ponzi game at the highest level.”

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Germany, France May Hurt AAA Ratings in ‘Ponzi Game’  260310banner2 [2]

The unprecedented loan package was designed by the European Union and the International Monetary Fund to halt a sovereign- debt crisis that threatened to push Greece, Portugal and Spain into default and shatter confidence in the euro. As part of the support plan, Germany’s Bundesbank, the Bank of France and the Bank of Italy started buying government bonds yesterday.

Bonds of Portugal, Spain and other deficit-plagued nations on Europe’s periphery soared yesterday and bunds — the safe haven for holders of European government bonds — weakened as the threat of a Greek default receded. The cost of insuring against sovereign losses using credit-default swaps tumbled yesterday, with contracts on Greece sliding 370 basis points, their biggest one-day decline, to 577, according to CMA DataVision.

Full story here. [1]


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URLs in this post:

[1] Bloomberg News: http://www.bloomberg.com/apps/news?pid=20601087&sid=an9qwBhKmH9s

[2] Image: http://purewaterfreedom.com/

[3] Germany and France examine ‘two-tier’ euro: http://www.prisonplanet.com/germany-and-france-examine-two-tier-euro.html

[4] Euro Rumormill Disintegration Begins As Reality Returns: France, Germany Fail To Reach Agreement On EFSF: http://www.prisonplanet.com/euro-rumormill-disintegration-begins-as-reality-returns-france-germany-fail-to-reach-agreement-on-efsf.html

[5] Merkel Says Germany Ready to Do `Whatever Needed’ to Save Euro: http://www.prisonplanet.com/merkel-says-germany-ready-to-do-whatever-needed-to-save-euro.html

[6] France & Germany: Save euro with one EU government: http://www.prisonplanet.com/france-germany-save-euro-with-one-eu-government.html

[7] Report: France & Germany Begin Talks To Break Up Eurozone: http://www.prisonplanet.com/report-france-germany-begin-talks-to-break-up-eurozone.html

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