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Euro Continues To Fall Due To Situation in Greece

The Euro took a big hit today after more bad news came out about the situation in Greece.

There was a conference call today between the IMF, EU Inspectors and the finance minister of Greece. Overall, the message that came out of the conversation was that Greece needs to shrink its public sector to get things under control. If the past is any indicator, this will be a very, very difficult task to achieve.

The problem is that Greece knows they have to do this, and the lenders want it done, but they can’t find a way to execute it. It would be nice to think that all this can be achieved with a swipe of the pen, but that just isn’t how politics works – it takes time and cooperation.

Unfortunately, Greece is very close to running out of money – they could be broke by mid October. If they do default, which is becoming more and more likely every day, the whole Euro zone will be rattled and things will fall like a rock. Let’s hope it doesn’t come to that, but action needs to be taken very soon to prevent it.

 

Italy Gets A Downgrade From S&P

The bad news for the Euro zone just keeps on piling up – S&P has downgraded Italy’s debt and they have maintained their negative outlook on the Mediterranean countries.

This was actually quite surprising to most people – Italy just passed a new austerity bill last week, things were starting to look up, and even Moody’s said it needed a few more weeks to make a final decision as to how they were going to rate Italy ion the future.

S&P’s justification for their downgrade was the fact that the government in Italy is not as stable as most people think, and it will be difficult to continue passing bills that will cut costs and balance their budget. When there are two or more parties fighting for power, not a whole lot can get done, and when action needs to be swift, this is a recipe for disaster.

This news sent the Euro down hard today, and when you combine it with the continuing negative news that seems to be coming out of Greece almost every day, one has to wonder if Europe will ever dig themselves out of their problems. We would all like to think that there is a viable solution in the near future for this situation, but as time goes on and things just keep on getting worse, it is hard to stay optimistic.

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