Last Friday, the sovereign debt of nine European nations—including France and Italy—was downgraded by S&P. Now, there are only four European nations whose sovereign bonds carry the highest AAA rating: Finland, Germany, Luxemburg and the Netherlands. Since the sovereign debt refinancing and potential default problem still goes unsolved, we foresee the markets having to keep digesting more waves of bad news.
Yet the fear created by such news is diminishing—not because of a shortage of negative news headlines—but because European banks are more protected by the many lifelines that central banks keep throwing them.
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Continue Reading: Who’s Afraid of the Big Bad Sovereign Debt Wolf?
