Excellent credit rating for Germany at risk

Euro rise up to the highest level in 11 months

Economic adviser, said the German government should reduce the credit rating of France

Fust said Professor of Economics at the University of “Oxford” in an interview with German news agency yesterday: “This process will continue. We are facing a year might not be great economic sense and will not leave Germany and France without effect.”

The consultant estimated the German finance minister, Wolfgang Schaeuble, chances are excellent credit rating fell to Germany by 50%.

In contrast, Faust said that this does not mean that the situation could turn into a terrifying drama, said: “The United States also has been reduced credit rating. And look to Germany as it would go down quite safe harbor after a little bit.”

The Faust that the external value of the euro could be exposed after the pressure is stronger, and said: “In the event of a scenario that Germany should become unable to pay its debts Everyone will expect the intervention the European Central Bank and the liberation of monetary policy, as happened in the United States and Britain,” explaining that It certainly will not reach to a state of bankruptcy.

Financial expert is not expected to be exposed to the European financial rescue fund to major disturbances following the reduction in credit rating of nine countries in the euro area.

Fust explained that the rules provide for borrowers to bear, ie countries such as Ireland and Portugal, financing costs, and said: “What can happen after that is to increase funding costs to borrowers a little.” And called on German Chancellor Angela Merkel eurozone governments to implement new financial rules quickly after Standard & Poor’s cut the credit rating of France, Austria, and seven of the banks of the second degree.

Merkel urged governments to implement the European fiscal rules that have been developed last December and activated as soon as possible.

Tabulated and the European stability mechanism, which is estimated at 500 billion euros at the moment to replace the European rescue fund.

She told the Financial Times that Merkel’s call last came at a time when euro zone leaders ignore the reduced credit ratings for a number of banks in their countries, by reference to the reforms already under way for the withdrawal of the euro area to get out of debt crisis in spite of the discomfort from Standard & Poor’s, which was clear as well.

Chancellor Merkel said that the reduction of credit rating for the European banks was the catalyst for the implementation of the steps toward financial unity and that those steps be codified in a treaty between the European governments that can be expected at the end of January this urgently. Merkel also called on European leaders to fight against what she described to ease its financial pressure here and there and everywhere.

Merkel insists that the outline of the European speed mechanical stability were presented from 2013 to the year 2012 may prove to be an important step forward.

However, I played Merkel tendon consequences for the Fund rescue of Europe, see Merkel, there is no need to introduce changes to the facility stability, AAA and who may lose, she will accept a diminished this facility in the case of EFSF financial stability of European cut credit ratings instead of raising the level of assurance.

Only three months ago from AAA and a loss of France to evaluate excellent credit.

French elections a blow to President Nicolas Sarkozy.

It also threatens that makes it difficult for Sarkozy to negotiate with Germany as we have seen already how they appear in the driver’s seat on an equal footing in terms of sovereign debt rating and on issues relating to the crisis the euro area.

Future negotiations

Said Jacques Cailloux, an analyst at Royal Bank of Scotland in a note to him: “The position of France on the European table is likely to be weaker compared to Germany, this may make future negotiations surrounding the financial integration more difficult.

He said today we are facing a challenge for the implementation of the financial agreement even faster … And to do so firmly and not for being an attempt to soften.

But Francois Fillon, French Prime Minister said that there was no reason to change the credit rating to change the balance of power between the two largest economies in the euro area. He said I do not think that this decision will change the relations between France and Germany first because this relationship is the structural … Because the fate of France and Germany fully compatible.

Fillon said the downgrade of the importance of reducing the credit rating “It was a warning, but should not be dramatic, but at the same time should not be underestimated. He added that the decision to Standard & Poor’s was the motive behind the situation in the euro area than the situation of France. Calling to expedite in the implementation of measures agreed at the summit of the euro area last December.

Fillon has ruled out the need to take additional austerity measures in France, saying the government will continue to focus on structural reform to boost growth and warned that he would not allow rating agencies to dictate policy to France.

He added that the situation of drastic cuts in spending in the current economic context will be a major threat to growth. We will not do it. For this we focus our efforts on structural reform to improve the competitiveness of France.

Reduce the debt and deficit

He said that there was no reason to review the government’s expectations for growth of at least 2012 until the publication of figures of growth in the fourth quarter of 2011.

According to Reuters, the Finance Minister of Austria, Maria Fekter described exposure to Hungary neighbor in difficulty and Italy have played a role in reducing the credit rating group in Europe, describing the reduction being the wake-up call for the country to reduce the debt and deficit as well as being an indictment of the inability of Europe to move quickly.

Fekter acknowledged that the reduction in credit rating group of Europe by Standard & Poor’s was not a surprise, adding that this reduction has shown that the euro area still has a long way to restore investor confidence.

For its part, Merkel revealed that it will consider the calls from her party colleagues for legislation to prevent institutional investors such as insurance companies from the sale of bonds when the credit ratings cut or decline to less than investment grade.

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