By Dominique de Kevelioc, de Bailleul
Beacon Contributing Writer
Financial markets are in disarray following Standard & Poor�s downgrade of Greek and Portuguese debt, with markets further aggravated by Moody�s announcement that it, too, expects to review the Portuguese debt situation.
On Wednesday, Moody�s had an epiphany that something was wrong with Portugal�s debt, deciding to strike down the baby EU nation with a most regrettable announcement that it may dispense judgment on the nation�s ongoing profligate behavior. Greece has already been trashed by the Goldman & U.S.-based rating agencies Pincer forces. Now the world awaits the U.S. invasion of the Portuguese people, while nervous investors scramble to escape the Portugal bond and swaps market before the Blitzkrieg reaches their wealth.
“Today’s rating action reflects the recent deterioration of Portugal’s public finances as well as the economy’s long-term growth challenges,” Moody’s said. �Recent deterioration� are the key words in Moody�s proclamation, and really should be replaced with, �recent urgent need to point out the ongoing deterioration,� of Portugal�s public finances, instead. The Fed�s deadline for exiting the mortgage-backed securities buying program ended back in March 31, and got spooked when rates on the 10-year treasury approached 4 per cent. It was time to pull out the agency weaponry.
At a time all European countries and the United States must attract mountains of cash to its credit markets like no time before, bashing the other guy�s credit markets makes a lot of sense. With rating agencies Moody�s, Standard & Poor�s and Fitch playing a significant role in the Goldman-Lehman mortgage market scam which culminated into setting up today�s mess, it should be no surprise that these little soldiers of fortune would be back again to re-enter the fight for the rights bestowed upon the printer of the world�s reserve currency.
“If you look at Greece, for example, I was quite surprised by the quite rapid deterioration in rating,” Michel Barnier, European commissioner from 1999 to 2004, said to the European Parliament. “The power of these agencies is quite considerable not only for companies but also for states. That’s why I asked for responsibility to be assumed in the work they are doing,” he said.
Previous suggestions were made earlier on by members of the European Commission of this U.S. threat, but no one apparently thought the matter of a home-grown, well-trained competing force was urgent enough to act upon its deployment. Now the agencies� attack upon the Euro has left gaping holes to its bow, with the world wondering whether the hole can be patched at all.
The agencies attack on Greece and Portugal was “without foundation” and was “targeting the euro as a whole and the sovereign debt of several countries,� said Portuguese Prime Minister Jose Socrates describing the nasty threat of a downgrade by the U.S. agency soldiers.
“Europe should take measures and go from words to actions,” he stressed.
The war on the Euro, which arguably began in 2003, has taken on more obvious and bold dimensions. Some analysts say the Eurozone is doomed; others say it will break apart. But after investors take stock of the matter in Europe, their eyes will most assuredly move across the English Channel and then across the Atlantic to the provocateurs of the recent Eurozone woes.
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