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BY NOE GANDILLOT
 
 

First Greece, now Italy.
Rating agency Standard & Poor’s has cut Italy’s long term credit rating from A+ to just A.
CBS has the details :

“Standards & Poors is downgrading Italy’s credit rating saying it expects weakening economic growth  for the country and higher than expected levels of government debt. The ratings agency has placed a negative outlook on Italy’s ratings and listed the countries’atttt political issues and heavy debt load has the main factor for the downgrade.”


French paper Le Figaro called the decision quote - “brutal and sudden”.


Rome was quick to react to the downgrade.
S&P’s decision made Italy’s president Silvio Berlusconi furious -- German paper Der Spiegel reports:

“Berlusconi released a statement insisting that his parliamentary majority was solid and that his government's $74 billion austerity package ... was sufficient to address his country's financial difficulties. He also blasted S&P, saying that the downgrade ‘seems dictated more by behind-the-scenes reports in newspapers than reality and seems contaminated by political considerations.’


S&P says the move was "apolitical" and argues it had put the country’s credit outlook on negative as early as May.
An analyst for Bloomberg agrees-- S&P’s decision was no great surprise:

“I think this is information that the market already new, and you can sort of see that today with the reaction, Europe’s stocks are actually up. It was understood that there had been significant deterioration in Italy’s fiscal position, so I don’t think this is very much new information for the market.”
 

But CNN’s Matthew Chance suggests Berlusconi had something to do with it, arguing-- his numerous sex and corruption scandals definitely played a role.

“The growing problem surrounding the country’s prime minister Silvio Berlusconi, who for the past several months, if not longer, has been involved in numerous corruption and sex scandals, and legal battles in the courts as well, and it’s all sort of adding up to a kind of perfect storm of problems for this country.”


Berlusconi’s reaction isn’t anything new. French economic paper Les Echos notes- politicians worldwide have taken issue with credit agencies’ inclusion of politics in their judgement.

"Are rating agencies doing politics? The accusation isn't new. Several European officials have made such criticisms over the past months. After every downgrade, Greek politicians have claimed the rating agencies were not taking their commitments into account. And the Obama administration did the same after S&P downgraded its debt."

All eyes are now on other rating agencies Fitch and Moody’s. The latter has already warned of plans to downgrade the country.

Business News: Italy Downgrade

S&P Downgrades Italy's Credit Rating

September 20, 2011
(2:30)
Rating agency Standard & Poors downgraded Italy's credit rating. Rome said the decision was "contaminated by political consideration."
   
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