How Europe Could Tame Spain's Crisis
Monday night, Moody's Investors Service cut its outlook on the Federal Republic of Germany from stable to negative. This does not mean that a downgrade of Germany's prized Aaa rating is imminent, but it is essentially Moody's way of saying that if nothing changes, a downgrade will eventually come.
As usual, Moody's is out of step with the market, as German bond yields are among the lowest in the world. But this action does highlight the limitations of outright support from core Europe to the struggling south. Indeed, Moody's cited the staggering cost to Germany of keeping the European Monetary Union together, compared with the tremendous uncertainty of allowing it to splinter. Either way, calling the situation "stable" strains credulity....511 more words left in this article. To read them, just click below and try Real Money FREE for 14 days.
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