gtnews Readers Don’t Think S&P’s Downgrading of France Exacerbates Crisis

In an inaugural gtnews online poll, held last week on our homepage, a majority of respondents did not think that Standard & Poor’s decision to strip France of its prized AAA rating and downgrade eight other eurozone countries earlier this month was detrimental to solving the eurozone crisis.

Out of 150 votes cast, a clear majority comprising of 97 people said no to the question: Is the eurozone crisis that much more difficult to resolve following the downgrading of France’s AAA rating by S&P on 13 January and the downgrading of eight other eurozone countries? In the yes camp, agreeing to the proposition, were 47 people, with nine don’t knows.

The gtnews online poll sparked off a lively debate on twitter and on the LinkedIn discussion group, with Dr Joachim Hensel, chief financial officer (CFO) and vice president at BMW Financial Services, and Paul Stheeman, an independent treasury executive based in Duisburg, Germany, both stating that they didn’t think S&P’s downgrades exacerbated the problem. “I voted no, mainly because the downgrade did not really come as a surprise anymore,” said Stheeman. “The market reaction was also relatively calm. Resolving the crisis, however, does still remain a formidable challenge. It always was a difficult task and will continue to be so.”

For Hensel, “a sovereign debt crisis is about fundamentals and the fundamental challenge is to co-ordinate appropriate measures in a confederation of 17 sovereign states.” This is no easy task he admits before going on to say that the politicians in the eurozone are rather late in attempting to address the crisis. “It may be doubted with regard to their public utterances that they fully understand the dynamics of a debt crisis,” he says. “Just look at the PSI [Private Sector Initiative] negotiations in Greece.” These PSI discussions are intended to restructure Greece’s debt as part of the second loan programme but resistance to a ‘haircut’ by investors and a lack of leadership have so far caused them to stall.

• The gtnews online poll will become a regular feature on our homepage. This week’s question is: Does the downgrading of France’s AAA rating by S&P on Friday 13 January hasten the likelihood of a separate European Credit Ratings Agency being established? VOTE NOW.


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