Irelands Credit Rating Downgraded to "Junk-Status"

[Coggeh]

Credit agency Moody's has tonight downgraded Ireland's debt rating to the junk status of Ba1.

Moody's said it reduced the rating by one notch because there was a 'growing likelihood' that Ireland will need more bailout aid in late 2013 when the current bailout ends.

The Department of Finance has criticised the 'disappointing development' saying Ireland had done all it can can 'to put our house in order'.

The agency warned of further downgrades as the economy struggles to pull out of the financial crisis.

Fore the rest: http://www.rte.ie/news/2011/0712/economy1.html

[crazyirish93]

The credit agency's are on downgrading spree its like they are trying to destroy certain economy's and thus the euro also many of these credit agency's are american owned maybe they are trying to draw attention away from the USA.Though it's also very likely that our economy is actually that bad.

[danyboy27]

http://www.youtube.com/watch?v=O0M5D5OA-d4

[Binh]

All of the PIIG countries will default eventually. Default doesn't mean 100% of the bonds are losses, it just means that investors will lose some of their money. The math just doesn't add up and austerity is only going to force their economies to contract further, exacerbating the problem. Check out boombustblog for more analysis.

[Tommy4ever]

Can anyone else still not believe that we are living through a period when advanced western governments quite simply go bankrupt?

I mean, what actually happens when you reach the stage where no one, not the EU, not the IMF, is willing to lend you more money? Does the state just collapse?

I guess we will probably never reach that point, it is just too much in the interests of capital to prevent it. But I'm sure by the end of the decade the Irish public sector will be so savaged by cuts demanded by lenders that it will have ceased to exist.

[RichardAWilson]

Did Argentina's? Did Brazil's? Did Korea's? Did Mexico's? Did Russia's? International institutions and organizations aren't going to allow that to happen. Working men and women will cover the balance.

[KC]

Can anyone else still not believe that we are living through a period when advanced western governments quite simply go bankrupt?

I mean, what actually happens when you reach the stage where no one, not the EU, not the IMF, is willing to lend you more money? Does the state just collapse?

Junk status doesn't mean that nobody lends you money, it means interest rates go up. No "advanced western government" has yet gone bankrupt.

[Tommy4ever]

Junk status doesn't mean that nobody lends you money, it means interest rates go up. No "advanced western government" has yet gone bankrupt.

I know what junk status means.

But when debt reaches junk status you have to be pretty brave to invest in it.

These bail outs aren't so far from being bankrupt - when a country requires an EU or IMF bailout it is basically bankrupt as it can no longer borrow enough money through the usual channels to keep itself afloat. I'd consider that as close as you can possibly get to a country declaring bankruptcy.

[KC]

Then you don't know what you're talking about because bankruptcy is completely different than getting a loan, which every country pretty much does.

[Tommy4ever]

Then you don't know what you're talking about because bankruptcy is completely different than getting a loan, which every country pretty much does.

As far as I was aware (forgive me if I'm wrong) bankruptcy is when you are unable to repay the debts owed to your creditors. If my definition is right then countries that have basically required the EU or IMF to give them money when no one else will (and these countries need more borrowed money to pay their creditors) is as close as you can get to a country going bankrupt. I mean, if the country isn't the Bhutan and has a huge impact on the rest of the world (like Greece and Ireland do) then capital will never actually allow those countries to reach the stage where they officially go bankrupt, so what I was saying is that these countries have got as close as you can get.

[Binh]

As far as I was aware (forgive me if I'm wrong) bankruptcy is when you are unable to repay the debts owed to your creditors.

No, bankruptcy is when you are unable to repay the debts owed to creditors in full. You go to court and negotiate with the creditors and a judge the amount you can pay back; your credit score is damaged for years afterwards, but you do not walk away scot free.

On a national scale, bankruptcy is the equivalent of defaulting.

The imperialist countries won't ever refuse to pay all of their debts to the banks and the credit markets won't ever completely cut them off. Even pariah states like Iran can get loans from China and Russia; hell, even the Bolsheviks got loans after they won the civil war.