Mean Girls

I should've published yesterday's post, because it prefaces what's going on today. It's all about the rating agencies...and also Ireland and Portugal are back stepping into crisis quicksand. First, a little bit about the rating agencies, as I rejigger yesterday's post.

Moody's and Standard & Poors are rating agencies. These agencies forecast the future. They are the so-called prophets of profit, upgrading and downgrading corporations and countries on scale from AAA (not the auto club) to junk (very literal). When a rating agency downgrades, investors get scared and pull their money. When they upgrade, investors jump in balls first. So, it's sort of what comes first, chicken or egg. Do the agencies accelerate the downfall, and what if they make a mistake?

Moody's downgraded Portugal debt/bonds to junk yesterday- old news. This scared investors into thinking twice before buying. Now Europeans are thinking maybe its not a good idea to depend so heavily on this agencies. In theory, they are supposed to be the safety guard. In reality, dad they done their job correctly a few years ago, by predicting, as is their purpose, the mortgage meltdown, we may not be in this situation. Good or bad, these agencies are the little voices that whisper into the ears of the money movers as they throw the dice.

I don't want to give the impression that Greece is the only bad apple in the bunch. There are a lot of compromised Granny Smiths. Countries experiencing similar issues are Iceland, Ireland, Spain and Portugal. Not to mention our own little deficit problem here on this side of the Atlantic. The Greeks are just most recent, and the most dramatic.

Ireland: Already working its bailout, is asking for a cost reduction.

Portugal: Able to sell its debt/bonds despite downgrade.

Greece: Creditor banks are meeting today on a plan to ease Greece into its reform, this includes a debt rollover.

France: AAA rating is in jeopardy if it doesn't meet its budget deficit leve.

US: Pres. Obama, the eternal optimist, is seeing a light at the end of the deficit negotiations tunnel. Deadline to increase the deficit cap is Aug. 2.


Tomorrow, I promise, less Greece, more anything else.