Spain hit as Greek 'illness' spreads over Europe -- Credit rating downgraded

[Elmore Furth]

Source: The Times

The crisis affecting the eurozone worsened yesterday when Spain’s credit rating was downgraded less than 24 hours after Greece was sent into financial meltdown.

Fear of contagion gripped Europe’s financial markets when the debt rating agency Standard & Poor’s cut the rating on Spain’s sovereign bonds. The decision — coming after the agency downgraded Portugal’s rating and cast Greek bonds into the scrapyard, designating them junk — sent the euro plunging against the dollar.

The risk that weak eurozone economies might be infected by a Greek financial virus added pressure to an emergency meeting in Berlin, where the heads of the International Monetary Fund and the European Central Bank considered a proposal to triple the size of a bailout for Greece.

After a meeting yesterday with Dominique Strauss-Kahn, the IMF chief, and Jean-Claude Trichet, head of the central bank, German MPs said that Greece would need €120 billion over three years. That would almost triple the size of the bailout fund agreed in principle by the eurozone states and IMF under which the member states would contribute €30 billion and the IMF €15 billion.



Read more: http://business.timesonline.co.uk/tol/business/economics/article7111123.ece

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It looks like the debt house of cards is getting a little shaky.

The spanish debt rating downgrade sparked European sell-off dropping the value of the Euro and the European stock markets.

http://business.timesonline.co.uk/tol/business/economics/article7110108.ece