Europe’s debt crisis is coming to the boil once more.
Ratings company Standard & Poor’s Corp. cut the Greek government’s long-term credit rating to single-B from double-B-minus,
the risk is rising that Greece will push its bondholders to accept a delay in the repayment of its bonds.
Europe’s debt crisis has returned full-circle to where it seemed to have peaked almost a year ago, when the euro zone agreed to a €110 billion ($158 billion) bailout of Greece and the creation, together with the International Monetary Fund, of a €750 billion safety net for other struggling euro nations.
Portugal is currently negotiating the third such aid package, following Ireland’s bailout agreement last fall
The euro zone’s southern fringe could remain financially fragile "for decades," leading German economist Hans-Werner Sinn said Monday.
The official line that Greece has a liquidity and not a solvency problem is showing its cracks, putting into question the whole framework of financial support," BNP Paribas analysts said in a research note on Monday
Germany is quietly pushing for Greece to sit down with its bondholders and discuss a delay in the maturity dates of its bonds.
The recent rise in Spanish bond yields is especially worrying for Europe because the country, whose €1.1 trillion economy is far larger than Greece’s, is viewed as the key battlefield in Europe’s struggle to stabilize its currency union.
There is no consensus about a maturity extension, a move that Germany is quietly pushing but that others, including the European Central Bank, are resisting, these people say
Many economists have suggested for months that a full-blown restructuring of Greece’s debts is probably inevitable, given the country’s weak growth prospects.
Posted from Diigo. The rest of my favorite links are here.