{"id":394,"date":"2010-04-09T14:32:00","date_gmt":"2010-04-09T18:32:00","guid":{"rendered":"http:\/\/www.intuitiveinvestor.com\/web\/?p=394"},"modified":"2018-08-20T15:41:15","modified_gmt":"2018-08-20T19:41:15","slug":"downgrading-of-greek-debt-puts-strain-on-eu","status":"publish","type":"post","link":"https:\/\/jasonapollovoss.com\/web\/2010\/04\/09\/downgrading-of-greek-debt-puts-strain-on-eu\/","title":{"rendered":"Downgrading of Greek debt puts strain on EU"},"content":{"rendered":"

Debt issued by Greece has been downgraded by credit ratings agency, Fitch.\u00a0 This means that debt issued by the country is more risky.\u00a0 In response to the credit downgrade many holders of Greek debt sold their interests, meaning that yields increased.\u00a0 This also means that any future debt issued by Greece will be at the new higher rates, straining the government’s ability to maintain its solvency.<\/span><\/p>\n

As I have reported on the blog, the problems with Greece’s debt are likely to lead to diminished unity for the EU.\u00a0 In particular, Germany, who has been called upon for decades to be the EU’s economic backstop, has said that it will not be aiding Greece unless the IMF has turned down the country.\u00a0 This demonstration of sovereignty by Germany was a signal to the entire EU that it is breaking ranks with the Union for the first time since World War II\u00a0and forging a new and unique foreign policy.\u00a0 Germany’s choice is also a signal to the other EU players that it is no longer the lender of last resort.\u00a0 In particular, Italy, Portugal and Spain are in\u00a0“too much debt” trouble.\u00a0 Right behind those nations are major players, the UK and France.<\/span><\/p>\n

If the EU is not unified in bust times, and only in boom times, then its members will start to question the raison d’etre of the Union.\u00a0 Meanwhile, the U.S. is the indirect beneficiary of a weakened EU.\u00a0 If there are any debt problems that bankrupt nations in Europe, the Euro will sell off leading to an appreciation of the $ dollar.\u00a0 It also will likely lead to a “flight to quality” as holders of European debt sell their interests and purchase U.S. dollar denominated debt.\u00a0 That increased demand for U.S. debt will drive down the lending costs for U.S. businesses and consumers – a very good thing.<\/span><\/p>\n

I will continue to monitor this situation closely, but right now it looks like the generations old European construct against U.S. hegemony, the EU,\u00a0is wobbling.\u00a0 Only time will tell if it collapses.<\/span><\/p>\n

Jason<\/span><\/p>\n","protected":false},"excerpt":{"rendered":"

Debt issued by Greece has been downgraded by credit ratings agency, Fitch.\u00a0 This means that debt issued by the country is more risky.\u00a0 In response to the credit downgrade many holders of Greek debt sold their interests, meaning that yields increased.\u00a0 This also means that any future debt issued by Greece will be at the […]<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_et_pb_use_builder":"","_et_pb_old_content":"","_et_gb_content_width":"","footnotes":""},"categories":[3],"tags":[],"class_list":["post-394","post","type-post","status-publish","format-standard","hentry","category-the-blog"],"_links":{"self":[{"href":"https:\/\/jasonapollovoss.com\/web\/wp-json\/wp\/v2\/posts\/394","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/jasonapollovoss.com\/web\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/jasonapollovoss.com\/web\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/jasonapollovoss.com\/web\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/jasonapollovoss.com\/web\/wp-json\/wp\/v2\/comments?post=394"}],"version-history":[{"count":0,"href":"https:\/\/jasonapollovoss.com\/web\/wp-json\/wp\/v2\/posts\/394\/revisions"}],"wp:attachment":[{"href":"https:\/\/jasonapollovoss.com\/web\/wp-json\/wp\/v2\/media?parent=394"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/jasonapollovoss.com\/web\/wp-json\/wp\/v2\/categories?post=394"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/jasonapollovoss.com\/web\/wp-json\/wp\/v2\/tags?post=394"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}