S&P cuts debt of Spain. Next stop, Ireland?
Traders are already speculating that, since rating agencies tend to move in bunches, Ireland could be next for a downgrade.
Here's what an Irish paper, the Independent, had to say about the state of finances in Ireland a few days ago:
"Despite three budgets in 14 months, wage cuts, spending cuts and tax increases, Ireland's position remains perilous. There will have to be further cuts in government spending in each of the next four years and there will be increasing pressure for tax increases and for new taxes."
Like Greece, Ireland also is putting a strain on its social contract. The article notes that both the government and the unions "believe that a deal can be struck that guarantees no further cuts in pay or pension entitlements for public servants and no enforced job cuts."
This illusion can only be maintained by a massive increase in taxes. (Read the Independent article here.)
Europe in Crisis:
- Full Story: S&P Cuts Spain's Rating One Notch
- Swaps Didn't Cause Crisis, Greece Did: Papantoniou
- 'Fast Money' Traders: Big European Storm Gathering?
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