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Tue Jul 24, 2012, 02:28 PM

Germany Brushes Off Warning Over Rating.

“Europe is sleepwalking toward a disaster of incalculable proportions,” the Institute for New Economic Thinking, a group of prominent economists funded largely by the billionaire financier George Soros, wrote in a new report .

The report urged countries with stronger economies, like Germany, to accept greater short-term “burden sharing” for the good of all. “Absent this collective constructive response, the euro will disintegrate,” the group wrote.

In issuing a “negative” outlook for Germany, the Netherlands and Luxembourg late Monday, Moody’s Investors Service cited what it said was an increased risk that those triple-A countries will have to bear the cost of propping up Spain and possibly even Italy.

Moody’s also pointed to what it said was a greater danger that Greece will leave the euro and “set off a chain of financial-sector shocks and associated liquidity pressures for sovereigns and banks that policymakers could only contain at a very high cost.”

In response, the German Finance Ministry said the short-term risks were “not new” and emphasized the country;s determination to keep its own fiscal house in order

http://www.nytimes.com/2012/07/25/business/global/daily-euro-zone-watch.html?_r=1&hp

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Reply Germany Brushes Off Warning Over Rating. (Original post)
elleng Jul 2012 OP
Franker65 Jul 2012 #1

Response to elleng (Original post)

Wed Jul 25, 2012, 04:44 AM

1. Too much pressure on Germany?

Its just a warning from one out of three ratings agencies - if the others follow, perhaps Germany should be worried. Still, it must be enormous pressure for Germany. Statistics show Germany contributes 27% to the bailout fund. I suppose the finance minister is quite correct when saying the warnings aren't new. Still, if Germany does get downgraded, it will be quite a significant blow.

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