Allowing for the timing almost all of this merely needs the word Britain substituting for Greece. We start on a higher plane than Greece but have much firther to fall.

This is the nemesis if voters are so stupid as to allow or - even worse - to work for a hung parliament. There are still those so ignorant that they cannot understand the misery that would bring. The latest poll today shows more optimism ! Readers of my postings do not have any excuse for such foolishness !!!

Christina


TELEGRAPH 7.12.09
Greece put on standby for debt downgrade
Fears over the solvency of Greece reached a new level on Monday night as Standard & Poors put the country's debt on notice for an imminent downgrade.

By Jamie Dunkley

The agency placed the country on credit watch negative, meaning it is likely to lose its A- rating within months. The country already has the lowest credit rating in the eurozone, but has come under greater scrutiny amid fears that its newly-elected government may avoid imposing significant cuts on the public finances.

The news, which coincided with a separate warning from Jean-Claude Trichet, European Central Bank president, pushed interest rates on Greek bonds to their highest levels in seven months.

In its assessment of Greece’s finances, S&P said that the govenment’s fiscal consolidation plans are “unlikely to secure a sustained reduction in fiscal deficits and the public debt burden”.

In the absence of further measures, S&P added that Greece’s general government debt burden could reach 125pc of GDP in 2010, the largest in the eurozone, or move even higher over the medium term. The next notch down from Greece’s current level would be BBB+, which is still in investment grade territory, albeit only narrowly.

Mr Trichet indicated that the moves carried out so far by the new government had not been sufficient to arrest the fiscal crisis. He said to the European parliament: “we all know the very important and courageous decisions that will have to be taken”.

Some commentators suspect that Greece is particularly vulnerable to a fiscal crisis, since, as a euro member, it does not have the luxury of being able to devalue its currency or inflate its way out of a growing fiscal burden. It must either deflate and accept slow and painful economic stagnation, or default on its debts, calling the wider euro project into question.

Following the recent crisis in Dubai, investors have become doubly sensitive to the risks of sovereign debt crises, with others warning that the UK is similarly exposed.

S&P also revised its outlook on Portugal’s sovereign-credit rating to “negative” from “stable”, blaming a deterioration in public finances.
The agency said Portugal’s public deficit could be higher than the 8pc of output foreseen this year, with its debt-to-gross domestic product ratio possibly hitting 90pc or more by 2011.

It added that trimming the budget would likely be complicated by structural weaknesses in the economy and weak competitiveness that would hamper growth. The agency said the economy was likely to show a 2.9pc contraction this year.

“The outlook reflects our view of the increased potential for a rating downgrade due to the larger deterioration in Portugal’s public finances than we previously expected, including an expected rapid increase in the debt-to-GDP ratio to more than 90 percent by 2011,” S&P credit analyst Kai Stukenbrock said in a statement.