Trouble afoot, folks--seems the S&P has decided that Greece's chances of repaying its debt issues are somewhere between slim and none, and Slim's on a ferry across the Aegean. And they're not the only one, either--Portugal also took a hit from the boys at S&P, and quite possibly at the worst time for the countries. This came right as Greece was trying to lay hands on forty five billion Euros worth of bailout loans, and since their bond status is now the lowest possible, there's a pretty fair chance they won't GET those bailout loans.
The big problem here is that Greece's primary creditor, Germany, wants some REALLY strong conditions set on any loans made to Greece, and that puts the idea of the Greeks getting German money in time for their next repayment date, May 19th, in deep doubt.
Portugal, meanwhile, may have a lot less debt than the Greeks, but Portugal's suffering from kind of a reverse halo effect--no one wants to loan Portugal money either because it's being seen as "next". Portugal, you'll remember, is regarded by some as part of the PIGS bloc: Portugal, Ireland, Greece and Spain. I personally think of it more as the SUKPIG bloc, by throwing in the United Kingdom which has seen better days herself. But that's just me opining.
Mild acronym levity aside, however, this may be the start of something truly nasty, if sovereign debt issues start going haywire like this all over. Of course, it could be limited to just Greece, which would still be a disaster but nowhere near as big of one. We'll have to keep an eye on this one to see how it all plays out, but it's not likely to be good news no matter how you frame it.
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