Tuesday, March 29, 2011
Amid the general indifference of the media and the markets more bad news from the Eurozone:
UK Prime Minister David Cameron refused to respond to suggestions that Britain may have to pledge billions of pounds to any emergency funding. He said: “It’s not right to comment and speculate on another country’s finances, and I’m not going to do that.” He has faced angry calls from his own Conservative MPs to refuse to contribute British money towards a bail-out. Well at the end it is a matter to save UK banks which are heavily exposed with the PIIGS as per chart below.
Moody’s put another nail in Spain’s coffin this morning, downgrading 30 Spanish banks by one or more notches. Interestingly, they left Santander and BBVA alone.
There had been expectations that the two-day summit in Brussels would agree a resolution over rescuing Portugal. But Portuguese ministers said they had no intention of following Greece and the Irish Republic in tapping the bail-out fund. Even so, analysts believe it is only a matter of time before other countries are forced to provide support to the ailing economy. Portugal says it does not need aid, but many analysts say Lisbon is in denial.
The financial markets are also worried as Portugal must repay a large chunk of debt to lenders in April. On Friday, Standard & Poor’s downgraded Portugal’s credit ratings by two notches to BBB and warned it could cut it further. S&P followed a two-notch cut by Fitch on Thursday.
A quick deal has been put together to give Irish banks $80Bn to shore up their finances – also money that is being created out of nowhere but, on the whole, it’s keeping the EU markets stable so far.
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