The downgrade by rating agencies of Greek government debt following Dubai World’s woes, is a stark reminder that the credit crisis dragon still has smoke pouring from its nostrils. Stock markets fell sharply across Europe and were in decline in late trading in the US, as investors sought shelter in trusted assets such as German government bonds. But analysts don’t see Greece’s problem as a sign of severe systemic distress, but rather a twitching of the slain debt dragon’s body. The Greek troubles also weighed on the euro, which dropped from November highs. Fitch’s new Greek rating of BBB+ (from A-), is still investment grade, but with a negative outlook, meaning a further downgrade is possible. The Greeks spent more than they had in the pot, and are now paying the price. Read more: The New York Times
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