Tuesday December 23, 2014 Search
Weather | Athens
13o C
8o C
News
Business
Comment
Life
Sports
Community
Survival Guide
Greek Edition
Rating agencies under fire for 'unjustified' Greek downgrades

When within three years the three large credit rating agencies, Moody’s, Fitch and Standard&Poor’s, issued no less than 33 downgrades or downgrade warnings for the Greek economy, it would appear reasonable for some to believe that their stand was a clear example of a self-fulfilling prophecy for the situation into which the country descended, Professor Manfred Gaertner of the University of St Gallen, Switzerland argued Tuesday.

Speaking to Deutsche Welle, he said such a belief gained credibility given that the problems of the Greek economy were clearly evident in advance to justify the credit rating agencies’ delayed response in 2009, when the crisis set in.

“The danger lies in the fact that an assessment can become a self-fulfilling prophecy. The unjustified and mistaken downgrade of a country can undermine the confidence of the markets in its credibility to such an extent that borrowing rates can reach such levels that would justify the unjustifiable downgrade, or even exceed it. All this can lead even an economically robust country to bankruptcy,” Gaertner said.

In a 2012 study, Gaertner and his colleague Bjoern Griesbach charged the rating agencies with moves during the crisis period that accelerated the speed of the eurozone’s excessively indebted countries’ slide toward economic disaster, as they continuously fed into investors’ insecurity and created a vicious circle of downgrades and borrowing rate rises.

He suggested that their stance led to the 2012 haircut on Greek bonds.

“The question we posed was this: Could it be that the unjustified downgrades forced Greece into the debt haircut? But instead of receiving a specific answer to this question, they keep telling us with self-complacency that they essentially managed to predict the Greek haircut.”

All three rating agencies expressed misgivings about the Greek economy in 2009, at least five years after their previous reports in 2004.

On August 1, 2014, Moody’s upgraded the Greek economy, forecasting 0.4 percent growth this year. Its previous forecast, on November 29, 2013, was for a 0.5 percent contraction.

ekathimerini.com , Tuesday August 19, 2014 (20:13)  
October data show fleeing bondholders
Expired debts to the state soar to more than 72 bln euros
First four contracts to fund small firms signed by IfG and banks
Investors putting plans on hold
Gov´t seeks better result in second presidential vote as bribe claim probe shelved
With all political parties now actively preparing for the prospect of snap elections, MPs are to vote in the second ballot of a critical three-phase presidential vote at noon on Tuesday. The...
Civil servants to grade evaluation scheme
As of Monday, Greek civil servants are now able to have a say in the public sector evaluation scheme that is currently undergoing fine-tuning by the Ministry of Administrative Reform. By log...
Inside News
SOCCER
Special day for Abidal, lucky one for PAOK
PAOK scraped through its Livadia challenge beating Levadiakos to remain on top of the Super League for Christmas, one point ahead of Olympiakos that enjoyed a great game at Kalloni and offer...
BASKETBALL
Explosive Barca unfazed by Panathinaikos, bomb scare
Panathinaikos lost 80-67 at home to Barcelona on Friday in a rather meaningless game at the end of the first group stage of the Euroleague, but the encounter will be remembered for the bomb ...
Inside Sports
INTERVIEW
Klaus Regling stresses debt sustainability through commitment to reforms
BRUSSELS – The man who is responsible for the loans to Greece as managing director of the European Stability Mechanism (ESM/EFSF), Klaus Regling, is the only high-ranking European official w...
INTERVIEW
‘Crisis of confidence will come back again and again,’ says Thomas Piketty
He’s treated like a rock star wherever he goes to lecture. His book “Capital in the 21st Century,” a study on income and wealth inequality from the 18th century to the present, recently tran...
Inside Comment
SPONSORED LINK: FinanzNachrichten.de
SPONSORED LINK: BestPrice.gr
 RECENT NEWS
1. October data show fleeing bondholders
2. Expired debts to the state soar to more than 72 bln euros
3. First four contracts to fund small firms signed by IfG and banks
4. Investors putting plans on hold
5. Gov´t seeks better result in second presidential vote as bribe claim probe shelved
6. Civil servants to grade evaluation scheme
more news
Today
This Week
1. Greek parliament vote in balance after Samaras election offer
2. Euro shaky on ECB and Greece, dollar keeps edge
3. Prosecutor gathers depositions in Independent Greeks 'bribe' probe
4. Government accuses SYRIZA and Independent Greeks of 'clear alliance'
5. Klaus Regling stresses debt sustainability through commitment to reforms
6. Draghi starts squaring QE circle in month of persuasion for ECB
Today
This Week
1. Samaras summons bond vigilantes with euro exit talk
2. High stakes
3. Europe's drama in Greece needs final act to avoid tragedy
4. On the edge but not gutless
5. Greek PM offers compromise solution with elections by end-2015
6. Ship with 200 migrants off Pylos towed to Italy after passengers refuse to stop in Greece
   Find us ...
  ... on
Twitter
     ... on Facebook   
About us  |  Subscriptions  |  Advertising  |  Contact us  |  Athens Plus  |  RSS  |   
Copyright © 2014, H KAΘHMEPINH All Rights Reserved.