Fitch casts doubt on eurozone plans to stop crisis
Fitch Ratings cast doubt today on the budget discipline pact European states intend to adopt being able to solve the eurozone debt crisis.
"Fitch has concluded that a 'comprehensive solution' to the eurozone crisis is technically and politically beyond reach," following the crisis summit last week at which the pact was announced, it said.
While it praised announcements that private bond holders would no longer be asked to accept losses and the eurozone's permanent bailout fund would be brought into operation sooner, it said it was concerned by the absence of a credible financial backstop.
"In Fitch's opinion this requires more active and explicit commitment from the ECB to mitigate the risk of self-fulfilling liquidity crises for potentially illiquid but solvent Euro Area Member States (EAMS)," it said in a statement.
The European Central Bank, strongly supported by Germany, has resisted stepping up its limited purchases of bonds of eurozone states, let alone explicitly taking on the role of a lender of last resort to governments.
The markets have welcomed the idea of the fiscal pact to help lock in budget discipline in the medium-term, they have been looking for stepped up involvement by the ECB to calm fears that countries like Italy and Spain will be driven by high borrowing costs into needing bailouts.
"In the absence of a 'comprehensive solution', the crisis will persist and likely be punctuated by episodes of severe financial market volatility," said Fitch.
It warned that such market volatility "is a particular source of risk to the sovereign governments of those countries with levels of public debt, contingent liabilities and fiscal and financial sector financing needs that are high relative to rating peers."
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Emma Xerri
Dec 16th 2011, 23:25
Until the ECB is given the full powers that the Federal Reserve in the US has, and without government intervention, all these credit ratings agencies will continue their assaults on the Euro. And why do these agencies, who are probably run by and for the benefit of the self-same private bankers, not threatening to downgrade the US for example who has a national debt of over 13 Trillion dollars? I wish someone from Fitch/Moody et al would explain this mystery?
In short, until the EU submits fully to the Banks, the Euro will remain under attack. In fact, the EU leaders summit went the other way, i.e. more regulation of banking, when in truth what private banks like the Federal Reserve lobby for is complete autonomy from government restriction and regulations and to be able to print the national money at will and lend to governments at high interest rates.
Emma Xerri
Dec 16th 2011, 23:20
Until the ECB is given the full powers that the Federal Reserve in the US has, and without government intervention, all these credit ratings agencies will continue their assaults on the Euro. And why do these agencies, who are probably run by and for the benefit of the self-same private bankers, not threatening to downgrade the US for example who has a national debt of over 13 Trillion dollars? I wish someone from Fitch/Moody et al would explain this mystery?
In short, until the EU submits fully to the Banks, the Euro will remain under attack. In fact, the EU leaders summit went the other way, i.e. more regulation of banking, when in truth what private banks like the Federal Reserve lobby for is complete autonomy from government restriction and regulations and to be able to print the national money at will and lend to governments at high interest rates.