Greece Hits Junk Bond Status. Portugal Downgraded as Well

The signs and portents of a total fiscal collapse for a significant amount of Europe are coming into shape. The reality is there is too much debt, the good times are over and the generous Social-welfare systems of these nations are collapsing underneath their own weight.

FRANKFURT — Greece’s credit rating was lowered to junk status Tuesday by a leading credit agency, a decision that rocked financial markets and deepened fears that a debt crisis in Europe could spiral out of control.The ratings agency, Standard & Poor’s, downgraded Greece’s long-term and short-term debt to non-investment status and cautioned that investors who bought Greek bonds faced dwindling odds of getting their money back if Greece defaulted or went through a debt restructuring. The move came shortly after S.&P. reduced Portugal’s credit rating and warned that more downgrades were possible.

The Europeans (and the Obama admin I suspect) are desperate for Greece to be propped up by Germany so as to avert the day of reckoning. The problem is that Germans don't feel like paying for the socialist utopia the Greeks managed to set up for themselves. In an ironic way this benefits America and papers over our own debt issues since the US dollar and T-Bills actually look like a good investment compared the faltering states of Europe. By the way, there are many on the left who claim its all about swap deals Greece got hooked into. Those deals clearly hurt their fiscal position, but in an of themselves are not what pushed the country off the fiscal cliff and are being used by some to avert their gaze from the socialist policies that have gutted these nations.The damage is just beginning.