Greece’s credit rating: Worse than junk status – Swedish Dagbladet

downgrade from credit rating of Caa1 to Caa2 means that Greece’s sovereign debt falls even deeper in the category of junk status. This decision reflects growing skepticism regarding Athens’ ability to stitch together a compromise with the international lenders – while the economy is on the brink of collapse.

Between January and March, tax revenues have fallen sharply and is now 5 percent below the government target. The government is therefore forced raiding funds in the social security system and in the municipalities. But no one knows how long that’s enough.

Unclear is especially all how Athens should be able to scrape together € 3.6 billion needed to pay interest and amortization of between 1 May and 30 June.

Prime Minister Alexis Tsipras knows he has the knife against the throat. But he is still looking for a way out of January’s generous campaign promises, which runs counter to the lenders’ demands for everything from rapid privatization for further savings.

The legislative proposals that Tsipras so far put in Parliament yesterday largely left the party’s voters to meet with, among other things, raising the minimum wage and tax exemption for incomes of less than 12 000 euros a year.

Probably he is prepared to put some of these in the future. But he must take into account hard-line leftist politicians in his own party and in the government that refuses to compromise and would rather risk that Greece may leave the euro zone.

Just as in Greece it is in the rest crisis countries policies that drive development. The difference is that in Italy, Spain, Portugal and Ireland rather concerns growing confidence and not decay.

In Cyprus, as in spring 2013 received an emergency loan of 10 billion euros, clubbed Parliament last week a new Bankruptcy opening for faster forced auctions. Markets assessment was consistently positive. When Cyprus early in the week issued a seven-year loan of over a billion euros were investors content with an interest rate of 3.875 percent – while Greece will pay over 20 percent of two-year loan.

In Spain thunders , the economy is now in full swing after the recent reforms including labor. During the first quarter of 2015, GDP increased by 0.9 percent from the previous quarter. On Thursday wrote economists at Barclays up the growth rate in 2015 to 3 percent. Here too the political risks subsided.

– The probability that the radical Left Podemos get a government majority in the local and regional elections on 24 May is the low, believe Antonio Garcia Pascual.

The rise in Spain began last year with exports and automobile industry as a growth engine. But now also rising domestic demand in the wake of increasing confidence, improving real wages and declining income.

– We see a positive spiral of confidence and rising private consumption, noted at the end of last week the rating agency Fitch affirmed Spain long-term credit rating of BBB +.

There are three grades above junk status.

Even in Italy is the policy that accelerates the recovery. The statistical office ISTAT recent report published this week is confidence in the manufacturing industry at its highest level since May 2011 and retail at the highest since December 2010.

The main reason is Matteo Renzi, the Prime Minister who took over in in February 2014 and since then has challenged the established political networks, which for years held back Italy’s growth forces.