An hour and a half after the original message was sent out, S&P sent out a clarification that the message resulted from a technical error and not from any action it intended to take against France.

French policy makers were understandably enraged and called for an investigation of the mistake.

At a time where the Eurozone was already getting very jittery over the problems of Greece and more recently Italy, this was the last thing that the markets needed. A downgrade of France’s AAA credit rating would affect the rating of the European Financial Stability Facility (EFSF), the bailout fund for struggling euro member countries.

Earlier in the year, S&P had downgraded the credit rating of the United States from AAA to AA+. This was followed by the resignation of its president Deven Sharma a few weeks after the downgrade.

To leave your comments, please go to : Confusion Over France Downgrade

This video analysis (done a few weeks ago) predicts that €2 trillion of funds will need to be ready before Greece can be allowed to default.

And as strikes in Greece intensify and credit ratings of Eurozone countries and banks continue to be downgraded, surely we are approaching the day when Greece will default and/or be booted out of the Eurozone.

This proceedings (or non-event) of this weekend will be crucial.

To leave your comments, please go to : Preparing for Failure of Greece

Greece is now desperately selling some of its national assets.

This is the modern warfare – losing one’s assets via economic and political means. Will the Greek citizens be able to accept that or will they say enough is enough and walk away?

And we now have a new word in the investment library : Reprofiling

Reprofiling, soft restructuring, anything but the word “default”. But don’t they mean the same thing?

John Mauldin’s thoughts are in the video below:

If it does happen, the impact could be big.

European banks and ECB would be forced to take a writedown on their exposure to Greek debt.

Remember that a major part of the financial crisis in 2008 is not so much the subprime defaults, but the refusal of banks to trade with each other. This almost caused the whole financial system to freeze up and the governments had to inject massive liquidity into the system.

If money isn’t loosened up, this sucker could go down. ~ George Bush in Sep 2008

To leave your comments, please go to : John Mauldin on Greek Default

Under the terms of the bailout,  Eurozone members and IMF would provide funds for a bailout program only if Greece or the troubled Eurozone member cannot cannot raise funds from financial markets.

The bailout plan was a victory for German Chancellor Angela Merkel, who demanded that a rescue for Greece only come when the country runs out of other options and that any rescue must include the IMF.

The IMF option had been heavily opposed earlier by the French and the European Central Bank, who were afraid that turning to IMF would damage the Euro’s standing.

However, each bailout case would still require the unanimous agreement of the 16 eurozone countries to release the loan funds. This means that any country in the Eurozone can veto a bailout.

So essentially, the bailout plan is like this:

1) If you need money, you need to tap the financial markets first.

2) If you are unable to do so, the rest of us will come together to decide whether we want to lend you money (with additional funds from IMF). All of us must agree to the deal for the funds to be released.

To leave your comments, please go to : Eurozone Bailout Plan for Greece?

Their huge deficits has lead the financial markets to increasingly believe in recent days that one of them might default on its sovereign debt.

Their recently downgraded credit ratings not only makes it more expensive for them to borrow money, and also harder to find lenders.

Devaluation of currency is not an option unless they want to consider leaving the Eurozone. To prevent this from happening, some of the stronger countries might have to step in to bail out the weaker ones. This is provided (of course) that the stronger countries are not in trouble themselves.

Ultimately, governments will find that they cannot spend more then they earn forever. The biggest challenge is knowing when a crisis will erupt as such situations can run for longer than expected.

Dubai was quickly written off as a non-event. How will PIIGS play out?

To leave your comments, please go to : PIIGS Threatens Stability of Eurozone