Monday, December 5, 2011 Report S&P to Put 6 Euro Nations on Credit Watch Negative Including Germany and France

Hmmm.... a bit of a dip in the market on this news but not truly "risk off" (that's when you buy the ETF: OFF)  But I am sure Germany is perturbed by this.  Maybe when they are threatened with their rating, that will be the step that allows for Full Bernanke at the ECB. :)

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For the rest of us mortals, see BusinessInsider:

  • The Financial Times is reporting that Standard & Poor's ratings service will put 6 euro area sovereigns on creditwatch negative later today.
  • The countries at risk are Germany, France, the Netherlands, Austria, Finland, and Luxembourg.
  • That means there's a 50% chance that each country could be downgraded by the agency from AAA to AA+ in the next 90 days.
  • This spells trouble for the success of plans to bail out struggling eurozone sovereigns, in particular the success of the European Financial Stability Facility.

EDIT 1:53 PM - more details on the German aspect

  • Markets have been braced for a potential downgrade of France but few expected Germany’s top rating to be called into question.
  • With regard to Germany, S&P said it was worried about “the potential impact (…) of what we view as deepening political, financial, and monetary problems with the European economic and monetary union.”

So in summary all these 'joint solutions' (ESFS, proposed Eurobonds) stand to sully Germany.  Which again goes back to my point above - does this closer fiscal integration idea, which will hurt Germany's credit rating as the "strong support the weak" cause them to say:  ok ECB do your thing.  Who knows.

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