Fitch ratings agency cut Greece’s credit rating three notches to B+ today forcing it deeper into junk status. They further warned of more cuts if no credible plan by the IMF and EU is created to pull the debt ridden country out of its hole.
Still struggling with poor revenues and a deep recession one year into its bailout by the IMF and the EU, it is looking like Greece will need to restructure its debt. Restructuring of debt is scary for those that lent Greece the money as they would likely take a “haircut” on their investment.
Fitch commented, “The rating downgrade reflects the scale of the challenge facing Greece in implementing a radical fiscal and structural reform program necessary to secure solvency of the state and the foundations for sustained economic recovery.”
After budgets for January through April were reviewed it was assessed that it was unlikely that Greece will be able to meet the bailout targets that were set. Thus the downgrade was no surprise. Some experts believe that it will not be possible for Greece to pull itself out of this mess without restructuring its debt.
Greece has until May of 2013 to get itself in financial health, when it will need to turn to the markets for credit when the bailout package expires.
In addition to Greece, the EU is struggling with Ireland, Spain and Portugal. It is amazing that the Euro is holding up in the face of this mess.
With fiat money in question in many parts of the western world is it any wonder why precious metals are doing so well recently (and in the past 10 years). It just makes sense to buy gold coins, acquire some silver and protect what you have saved!
The worst part of all of this is that the US is on the same path as Greece. Our debt is growing at unsustainable levels, unemployment is really bad, individual states are approaching bankruptcy, our manufacturing base has been moved out of the country; it is only a matter of time before we will be forced to employ some of our own austerity measures, which will hurt many people here at home.