The only satisfaction they could find in the day the Spanish was the possible classification of Barcelona to the finals of the Champions League. but unfortunately neither sport might have that satisfaction. The cut in the credit rating of Spain comes at an inopportune moment in which the Spanish government is a vacuum and urgently needs funds financed through equity markets. The increased cost to be faced by the Spanish government borrowing, does nothing to make heavier the situation. And if the downgrade was bad news for Spain, also for other economies such as Italy, Ireland and Portugal are in a similar situation. As the N1H1 virus, economies become infected rapidly and access to financing will be higher costs.
The euro did not feel safe from the dark day that was experienced last Wednesday and returned to see the floor. For more clarity and thought, follow up with Capital One Financial Corp. and gain more knowledge.. The currency of the eurozone reached new annual lows and remained bearish perspective, with the target to break the floor of $ 1.30, but yesterday, the expectation of the rescue of Greece, gave him some air and managed to recover against the dollar. Despite yesterday’s relief, they live a tense calm in Europe. The situation that is sweeping Europe is comparable to the worst moments of crisis in Latin America where they expanded to across borders carrying economies into recession destructive of the productive apparatus. Maybe after this tragic experience, and what lived in the subprime crisis, the developed world can better understand the emerging economies and their problems, in particular, Latin American economies. And as happened with Argentina’s debt rating in 2002, this time S & P has decided to downgrade to “junk” rating on sovereign debt is now Greece’s BB + (speculative investment category.) I think S & P should not be so wrong this time in its rating and that Greece continues to surprise, worse, to the size of the ransom needed to avoid falling into default: 135.000 million euros, he claimed the German Minister of Economy, Rainer Bruder, that would be contributed by the European Union and the IMF. Precisely, the help you need at the moment Greece is triple than expected at first. Is it enough or need more? What to do if the needs of Greece are even greater? If we consider that the bailout is the lesser evil, do not want to imagine what can happen to the European and world economy in the event that Greece would not receive assistance.
If the numbers are correct, Spain should pay around 11,700 million euros to rescue But who will rescue Greece to Spain? A statistic that reveals the importance of preventing a possible collapse of the Greek economy: According to estimates by Standard & Poor’s, in case of bankruptcy of the Greek economy, the bondholders only recover between 30% and 50% nominal value of bonds, so the estimated loss would be around 200,000 million euros. Any similarities with Argentina in 2002 is purely coincidental and believe me I would not be in the shoes of those bondholders who cheated by the Argentine bonds decided to entrust their savings in countries with better records a continent such as Europe and decided to seek a minimum return betting on Greece.