News / Europe

S&P Threatens Downgrade for Europe Bailout Fund

The map of Europe is featured on the face of a two Euro coin seen in this photo illustration taken in Rome, December 3, 2011.
The map of Europe is featured on the face of a two Euro coin seen in this photo illustration taken in Rome, December 3, 2011.

The credit agency Standard & Poor's is now threatening to downgrade the top rating of the bailout fund for Europe's debt-ridden countries.

S&P issued the warning Tuesday, a day after it placed 15 of the 17 nations that use the euro, including economic powerhouses Germany and France, on a negative credit watch.

The credit agency said it would decide within 90 days whether to cut the AAA credit rating for the bailout agency by one or two notches after determining whether the credit standing of any of the individual countries should be trimmed.

A debt analyst for S&P, Moritz Kraemer, said at a Frankfurt news conference that it issued the warnings because European officials have made "a very slow and reluctant response" to the continent's debt crisis. He expressed skepticism that European leaders would act at a summit later this week to resolve the two-year debt contagion.

Kraemer said the effects of the debt crisis have spread through the continent and could worsen.

"Well, it's our opinion that the financial crisis that we are witnessing in the eurozone is no longer a crisis of individual countries on the periphery. We think it has taken a more systemic trajectory. It has been spreading into some core countries and also financial institutions in the core countries," Kraemer said. "It has deepened on the periphery. So we think that the current situation has the potential to destabilize further."

If the credit rating for the $591 billion bailout fund is cut, it would boost the borrowing costs to assist debt-ridden countries. Greece, Ireland and Portugal have already needed international assistance and analysts fear that Italy and Spain, with the continent's third and fourth largest economies, also might need help.

U.S.Treasury Secretary Timothy Geithner (L) leaves the headquarters of the European Central Bank (ECB) in Frankfurt, December 6, 2011
U.S.Treasury Secretary Timothy Geithner (L) leaves the headquarters of the European Central Bank (ECB) in Frankfurt, December 6, 2011

U.S. Treasury Secretary Timothy Geithner traveled to Europe Tuesday to prod the continent's leaders to take decisive action. He said the U.S. is encouraged that European leaders are taking steps to alleviate the crisis, while acknowledging that American policy makers face their own economic challenges.

Geithner is meeting with German Chancellor Angela Merkel and European Central Bank President Mario Draghi to warn that further delays could imperil the world economy, including the sluggish recovery in the American economy, the world's largest.

Ms. Merkel and French President Nicolas Sarkozy unveiled a plan Monday for tighter controls over the spending of individual governments. They called for changes to the treaty governing the 27-nation European Union, or at least covering budgets in the 17-nation eurozone.

European officials criticized the S&P threat of a downgrade, saying it ignored new efforts to resolve the crisis and the plans for unified action at the Brussels summit Thursday and Friday.

Ms. Merkel vowed that Europe would act and downplayed the significance of the possibility of an S&P ratings cut.

"What a rating agency does is the responsibility of the rating agency. On Thursday and Friday we will make the decisions which we think are important and indispensable for the eurozone and therefore contribute to the stabilization of the eurozone," Merkel said. "I also think we will regain confidence. I have always said this is a long process and it will continue for some time, but we charted the course yesterday with the French president and we will continue to stay the course."

All 27 EU nations would have to approve changes to the 1992 Maastricht Treaty that created the EU, but broad approval would not be necessary if spending controls apply only to the eurozone.

Some information for this report was provided by AP and AFP.

You May Like

EU Court Fines Poland for Hosting CIA 'Black Sites'

Ruling is first time a court has acknowledged suspects were held and tortured at the sites, under US program launched following the 9/11 terrorist attacks More

Migrant Issues Close to Home Spur Groups to Take Action

Groups placing water, food in the desert, or aiding detainees after release, have one common goal: no more deaths of migrants crossing illegally into the US More

Video At AIDS Conference, Prevention Pill Stirs Excitement

Truveda shows promise, spurring debate over access and other approaches More

This forum has been closed.
Comments
     
There are no comments in this forum. Be first and add one

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
Israel Targets Gaza Supply Tunnelsi
X
July 24, 2014 4:42 AM
The Israeli military has launched a ground operation in Gaza to destroy the myriad tunnels that may have been used to smuggle weapons to Hamas. VOA's Zlatica Hoke reports that could mean more hardship for the people of Gaza, who obtain some of their essential supplies through these underground passages
Video

Video Israel Targets Gaza Supply Tunnels

The Israeli military has launched a ground operation in Gaza to destroy the myriad tunnels that may have been used to smuggle weapons to Hamas. VOA's Zlatica Hoke reports that could mean more hardship for the people of Gaza, who obtain some of their essential supplies through these underground passages
Video

Video MH17's 'Black Boxes' Could Reveal Crash Details

The government of Malaysia now has custody of the cockpit voice and flight data recorders from Malaysia Airlines Flight 17, which was hit by a missile over Ukraine before crashing last week. As VOA's Carolyn Presutti reports, the so-called black boxes may hold information about the final minutes of the flight.
Video

Video Living in the Shadows Panel Discussion

Following a screening of the new VOA documentary, "AIDS - Living in the Shadows," at the World AIDS conference in Melbourne, a panel discussed the film and how to combat the stigma associated with HIV/AIDS.
Video

Video IAEA: Iran Turns its Enriched Uranium Into Less Harmful Form

Iran has converted its stockpiles of enriched uranium into a less dangerous form that is more difficult to use for nuclear weapons, according to the United Nations’ Atomic Energy Agency. The move complies with an interim deal reached with Western powers on Iran's nuclear program last year, in exchange for easing of sanctions. Henry Ridgwell reports for VOA from London.
Video

Video Relic of Saint Draws Catholics Worried About Immigration Issue

A Roman Catholic saint who is a figure of devotion for those crossing the border into the United States is attracting believers concerned about the plight of undocumented immigrants. Mike O'Sullivan reports from Los Angeles, where a relic of Saint Toribio has drawn thousands to local churches.
Video

Video US Awards Medal of Honor for Heroics in Bloodiest of Afghan Battles

U.S. combat troops are withdrawing from Afghanistan, on pace to leave the country by the end of this year. But on Monday, U.S. President Barack Obama took time to honor a soldier whose actions while under fire in Afghanistan earned him the Medal of Honor. VOA's Jeff Seldin has more from the Pentagon.
Video

Video Ukraine Rebels Surrender MH17 Black Boxes

After days of negotiations, a senior separatist leader handed over two black boxes from an airliner downed over eastern Ukraine to Malaysian experts early Tuesday. While on Monday, the U.N. Security Council unanimously demanded that armed groups controlling the crash site allow safe and unrestricted access to the wreckage.
Video

Video In Cambodia, HIV Diagnosis Brings Deadly Shame

Although HIV/AIDS is now a treatable condition, a positive diagnosis is still a life altering experience. In Cambodia, people living with HIV are often disowned by friends, family and the community. This humiliation can be unbearable. We bring you one Cambodian woman’s struggle to overcome a life tragedy and her own HIV positive diagnosis.

AppleAndroid