Who is next on the credit ratings money go round?
Amid suggestions that the UK and US national credit ratings could be cut in the short to medium term many observers are now looking elsewhere to see who the next victims could be. While Spain has already had the misfortune of seeing the country's national credit rating reduced it seems almost certain that others will follow in due course.
As we have seen in UK banking sector, rumours and untruths can cause significant problems and there are serious concerns that this information vacuum regarding other countries will prove something of a godsend to more unscrupulous traders. With the European Central Bank already under significant pressure many people are worried that further downgrades around the world, which could include some of the more established and new entrants to the EU, appear almost inevitable.
A round of significant credit downgrades could have a serious impact upon the many rescue packages being implemented by governments around the world. While many have already loaned billions upon billions of pounds, a reduction in their credit ratings will see more expense added to future fundraisings and ultimately extend the length of the current recession. After a period when it appeared that the UK, and other economies around the world, was starting to stabilise it now looks as though we could be in for a very bumpy ride over the next few months.
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