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    December 06, 2011

S&P Might Downgrade Europe Bailout Fund

   VOA News
   If the credit rating for Europe's $591 billion bailout fund is cut, it
   would boost the borrowing costs to assist debt-ridden countries. Photo:
   REUTERS
   If the credit rating for Europe's $591 billion bailout fund is cut, it
   would boost the borrowing costs to assist debt-ridden countries.

   The credit agency Standard & Poor's is threatening to downgrade the top
   rating of the bailout fund for Europe's debt-ridden countries.
   S&P issued the warning Tuesday, a day after it placed 15 of the 17
   nations that use the euro - including economic powerhouses Germany and
   France - on a negative credit watch.

   The credit agency said it would decide within 90 days whether to cut
   the AAA credit rating for the bailout agency, by one or two notches,
   after determining whether the credit standing of any of the individual
   countries should be trimmed.
   At a Frankfurt news conference, the credit agency said that it issued
   the warnings about individual countries because European officials have
   made "a very slow and reluctant response" to the continent's debt
   crisis. An S&P official expressed skepticism that European leaders
   would act at a summit later this week to resolve the two-year debt
   contagion.
   If the credit rating for the $591 billion bailout fund is cut, it would
   boost the borrowing costs to assist debt-ridden countries. Greece,
   Ireland and Portugal have already needed international assistance and
   analysts fear that Italy and Spain, with the continent's third and
   fourth largest economies, also might need help.

   France's President Nicolas Sarkozy (R) and German Chancellor Angela
   Merkel, in Paris Dec. 5, 2011, have agreed on a series of reforms to
   address the euro zone sovereign debt crisis.

REUTERS

   France's President Nicolas Sarkozy (R) and German Chancellor Angela
   Merkel, in Paris Dec. 5, 2011, have agreed on a series of reforms to
   address the euro zone sovereign debt crisis.

   U.S. Treasury Secretary Timothy Geithner traveled to Europe Tuesday to
   prod the continent's leaders to take decisive action.
   Geithner is meeting with German Chancellor Angela Merkel and European
   Central Bank President Mario Draghi to warn that further delays could
   imperil the world economy, including the sluggish recovery in the
   American economy, the world's largest.
   European officials criticized the S&P threat of a downgrade, saying it
   ignored new efforts to resolve the crisis and the plans for unified
   action at the Brussels summit Thursday and Friday.
   On Monday, Merkel and French President Nicolas Sarkozy unveiled a plan
   for tighter controls over the spending of individual governments. They
   called for changes to the treaty governing the 27-nation European
   Union, or at least covering budgets in the 17-nation eurozone.
   All 27 EU nations would have to approve changes to the 1992 Maastricht
   Treaty that created the EU, but broad approval would not be necessary
   if spending controls apply only to the eurozone.

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