… sorry.
I’ve been trying for several days to write something about the situation in Greece.
I think I’ve been going wrong, in trying to draw lessons for the UK, be it in terms of the Euro, debt, GDP, state spending etc. Each time I’ve run into a brick wall. We’re not really in the same boat as Greece whichever way I try to frame it.
The Greek situation continues to fascinate me nonetheless. Today their sovereign debt was downgraded to junk status.
Greece’s debt has been downgraded to noninvestment status by Standard & Poor’s amid mounting fears that the debt crisis in Europe is spiraling out of control.
In a statement Tuesday, the agency says that it is lowering its rating on Greece’s debt three full notches, to BB+ from BBB — the first level of speculative, or junk, status.
The outlook is negative, meaning the agency could downgrade the rating again.
The agency is also warning debtholders that they only have an average chance of between 30 to 50 percent of getting their money back in the event of a debt restructuring or default.
The Germans are making noises about forcing Greece out of the Euro, Merkel is equivocating about a rescue-package. Deeper cuts are being demanded of Greece, and there’s already civil unrest about what they’ve had to do so far and what is to come as a consequence of a Eurozone/IMF bailout.
There’s a knock on effect on Portugal, with dangers present for Ireland and Spain, too, as well as the rest of us who trade with the Eurozone.
Meanwhile, much better informed views than mine here, at Burning Our Money.
This can’t possibly end well.
AJ
Al Jahom's Final Word 
“We’re not really in the same boat as Greece”
Oooh I dunno. High deficit spending, government (current and potential) not really having published what they’ll cut in any detail. More links written up here.
Our saving grace so far has been to slaughter our currency (roughly 25% against most major stable currencies), and due to the state ownership of banks, we get a longer stay of execution.
But unless the next government announces a fully detailed plan of cuts, expect our gilts to become more and more expensive for the Treasury, and by implication, the taxpayer. That’s where Greece was in about February; these things can blow up very quickly.
Why do you think we’re not in the same boat?
a combination of social, economic and political hunches, really.
Undeniably, we aren’t in the Euro, nor are we anywhere near as far down the slope as Greece – BBB to BB+ with a negative outlook is rather worse than our AAA, even if ours also has a negative outlook.
I also doubt we’re in for anything as instant and dramatic as the Greeks have undertaken in terms of cuts.
I think large-scale civil unrest unlikely here. I doubt we’ll see the likes of the poll-tax riots or miners strikes again in my lifetime. Who can be arsed when the police are so well armed and lawless?
As far as striking goes, people are simultaneously living hand to mouth and driving new cars. They can’t afford to strike in a big way.
If anything, the Irish have provided a model for making vast cuts with equanimity.
Rioting is usually the preserve of the left. So if it’s St Vince doing the cutting we’ll be alright, if it’s the baby eating Children of Thatcher, they’ll be queuing up for the riots.
>I think large-scale civil unrest unlikely here.
Think again. If Gorgon McRuin manages to hang on with the aid of that pratt Clegg there will definitely be large scale civil unrest.
Even if I have to kick it off by myself!
“This can’t possibly end well.”
If it ends in the collapse of the EU, that must be a good ending…
Smith W 6079