World markets plunge as Greek credit downgraded to “junk” status
Stock markets in Europe, the US, and other regions closed sharply lower yesterday after ratings agency Standard & Poor’s downgraded its sovereign credit rating for Greece to “junk” status and also lowered Portugal by two notches. The downgrades reflected growing fears that the southern European governments will prove unable to implement promised austerity measures in the face of determined domestic opposition, raising the danger of the sovereign debt crisis spreading to the world’s major economies. “The biggest risk now is that the market speculates against every single indebted peripheral country, and that could lead to a sovereign debt crisis,” Axel Botte, a fixed- income strategist at AXA Investment Managers in Paris, told Bloomberg. “The contagion risk is real.” TimesOnline: German tabloids campaign for Greece to leave the euro. IJSR: Greece: Driven into crisis. Al Jazeera: Greek downgrade sparks stocks slide. WaPo: As stocks slump, European, IMF officials push Germany on Greece.