Greek government debt is officially junk

I have a feeling that stories like this — and not just about Greece — are about to become ubiquitous:

Moody’s Investors Service on Monday downgraded Greece government bond ratings into junk territory, citing the risks in the euro zone/IMF rescue package for the debt-laden country.

The agency downgraded the rating by four notches to Ba1, placing it one notch into junk status. The outlook is “stable”.  Moody’s also downgraded Greece’s short-term issuer rating to not-prime from Prime-1.

Wait a minute… citing risks in the rescue package? That’s not how things are supposed to work, is it?  Neo-Keynesianism says all you need to do is boost aggregate demand by kicking out more and more money and, I dunno, dropping it on Athens from a helicopter.  So has Greece run out of paper, or ink, or what?

The rescue package “effectively eliminates any near-term risk of a liquidity-driven default and encourages the implementation of a credible, feasible, and incentive-compatible set of structural reforms, which have a high likelihood of stabilizing debt service requirements at manageable levels,” said Moody’s senior analyst Sarah Carlson.

“Nevertheless, the macroeconomic and implementation risks associated with the program are substantial and more consistent with a Ba1 rating.


“The most important risk [for Greece’s ratings] is the growth outlook,” she added.

Greece, with a debt load forecast to reach 149 per cent of gross domestic product by 2013, is expected to see its economy slump by 4 per cent this year after a 2 per cent drop in 2009, as tax increases and cuts in wages and pensions take a toll.

Oh… long-term growth and debt load forecasts.  That sounds almost… Austrian in outlook.  Huh.

One is given to hope that other national governments will take a long hard look at the Greek situation, take a long hard look at their own debt forecasts, and make plans to avoid awful things like 1.49 debt/GDP ratios, IMF bailouts, and sudden austerity measures.  One is also given to hope that one will find an unredeemed winning lottery ticket carelessly discarded at a bus stop.  One had fuckin’ well better not count on either.

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anarchocapitalist agitprop

Be advised

I say fuck a lot



Statistics FTW


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