The Irish government has received the worst possible Christmas present from the ratings agency Moody’s
It gave a resounding thumbs-down to Europe’s efforts to resolve a rolling debt crisis by slashing Ireland’s credit rating by five levels despite the EU/IMF bailout.
Moody’s also warned further downgrades could follow if Dublin cannot stabilise its debt situation.
As a result it is having to offer an even higher rate of return to get investors to buy their government bonds as did other debt laden euro zone countries Spain and Portugal.
Analyst Robert Halver of Baader Bank in Frankfurt blamed European leaders for not doing enough: “There can only be a far-reaching solution to the crisis: that is the United States of euroland. That’s the solution, otherwise, the markets won’t be satisfied. If we carry on like this is headless chicken town with 16 crazy chickens not being able to mount a common defence, and if people are happy with a minimum compromise that could have been reached just with a telephone conference call, then you shouldn’t be surprised that we’re the laughing stock of the financial markets.”
The market reaction showed a lack of confidence in ongoing EU efforts at the Brussels summit to safeguard the euro.
One analyst described it as “another missed opportunity to calm the markets.”
Economists said the euro zone debt crisis looks set to continue on into next year and there are worries that it could derail the global recovery.