Posted by seumasach on July 6, 2011
7th July, 2011
Greek Foreign Minister Stavros Lambridinis attacked on Wednesday what he termed the “madness” of ratings agencies in the European debt crisis, saying they exacerbated an already difficult situation.
He told a conference in Berlin that the decision by Moody’s agency late on Tuesday to downgrade Portuguese debt to speculative status was not based on any failure to implement economic reforms.
The downgrading reflected rather “the assumption that Portugal would need a second bailout.”
Lambridinis said that this had “the wonderful madness of self-fulfilling prophecy” by aggravating Portugal’s fiscal straits.
He accused market players of undermining his own debt-saddled country by betting on a default.
“Unfortunately a lot of people in these `rational’ markets have invested billions of euros in (a) Greek collapse,” he said.
“That part of the market is more interested in seeing us fighting each other… and hoping that in the end they would make the money that we are losing.”
Lambridinis lamented the deterioration in relations between Greece and Germany, the biggest national contributor to the rescue package for Athens, and reminded Germany that it had a vested interest in the strength of the eurozone.
“The Germans feel they are bailing out some sinners,” he said, while the Greeks feel like they are being “helped” by a harsh schoolmaster.
“The patient is not Greece it is the stability in Europe.”
He thanked Germany for its support during the crisis but noted it had profited handsomely from the single currency and the common market.
“The airport of Athens was built by German companies and paid largely by European funds,” Lambridinis cited as an example.
Moody’s Investors Service slashed Portugal’s credit rating by four notches to Ba2 from Baa1 and warned that it could be lowered further.
The agency said its main concern was that Lisbon would require a second bailout, just as Greece now does, and that private sector creditor banks would have to take some of the pain.
And on Monday Standard & Poor’s warned that current proposals for a second Greek bailout could constitute an effective default.
That warning led German Chancellor Angela Merkel to demand that ratings agencies take a back seat to the the International Monetary Fund, the European Central Bank and the European Commission in determining Greece’s fate.