Moody’s downgrades debt of 30

artappraiser — Fri, 25 Mar 2011 16:19:56 +0000

In reply to Portugal edges toward bailout after govt quits

Moody’s downgrades debt of 30 Spanish banks
All Headline News, March 24, 2011
Moody’s Investors Services downgraded the senior debt and deposit ratings of 30 smaller Spanish banks Thursday. The agency cited more financial pressure on Spain’s sovereign rating for the downgrade.

Among those affected are 15 banks whose ratings went down by two levels and five banks which suffered three or four downgrades.

Moody’s said the Spanish government would soon have to make the hard choice between supporting the banks and the need to protect the country’s coffers. Moody’s opined that the Spanish government is not prepared to support all these banks financially.

The downgrade reflects the turmoil facing Spain’s banking industry, which was weakened by the collapse of the real estate industry.

If the Spanish government would shore up the smaller banks, the Madrid government may face the same financial crisis that hit Ireland, which was forced to accept an international bailout and eventually led to the collapse of the Irish coalition government.

None of the large Spanish banks are included in the Moody’s downgrade because the government is not prepared to let systematically important financial institutions fail....

Spain's Bank Rescue Hits Headwinds
By Sara Schaefer Muñoz, Wall Street Journal, March 25, 2011

LONDON—Spain's plan to rescue its regional banks is running into headwinds as private investors, who are being asked to pour in cash, and ratings firms raise questions about whether the lenders have admitted to all of their real-estate losses.

Raising private capital to bail out Spain's private savings banks, or cajas, is an increasingly important test of confidence in Spain, especially since the market became convinced that neighboring Portugal would need a bailout....

A Nation of Dropouts Shakes

artappraiser — Fri, 25 Mar 2011 15:29:24 +0000

In reply to Portugal edges toward bailout after govt quits

A Nation of Dropouts Shakes Europe
By Charles Forelle, Wall Street Journal, March 25, 2011

LISBON—[...]

Just 28% of the Portuguese population between 25 and 64 has completed high school. The figure is 85% in Germany, 91% in the Czech Republic and 89% in the U.S.

"I don't see how it is going to grow without educating its work force," says Pedro Carneiro, an economist at University College London who left Portugal to do his postgraduate studies in the U.S. [....]

Education long was an afterthought here. "The southern countries like Portugal and Spain and the south of France and Italy, we have always had some problems related with education," says António Nóvoa, a historian who is rector of the University of Lisbon. "That's been like that since the 16th century."

The repressive dictatorship that ruled Portugal from 1926 to 1974 had the idea "that people should not have ambition to be something different than what they were," Mr. Nóvoa says. The result was widespread illiteracy and little formal schooling; just three years were compulsory. Huge leaps have been made since the 1970s, he says, but "it is not easy to change a history of five centuries."

Portugal has just begun phasing in 12 years of required schooling; now, Portuguese can leave school after ninth grade. Many do. The government says it is racing ahead with reforms. Mr. Sócrates points to an initiative that gives students laptops and to a far-reaching project to rebuild dilapidated schoolhouses. Results last year show students improving on standardized tests.

But it is a long road. "We have accumulated years and years of ignorant people," says Belmiro de Azevedo, a billionaire industrialist.

He described the system as calcified. The central administration wields tight control. Curricula are simultaneously undemanding and rigid. Dropout rates are high. Schools struggle to accommodate an influx of immigrants from Portugal's former colonies in Africa, such as Angola and Guinea-Bissau.

A push to evaluate teachers triggered searing strikes and demonstrations in 2008, souring relations between powerful teachers' unions and the government. The political life of education ministers is measured in months: since the dictatorship ended in 1974, there have been 27. [....]

A letter from Lisbon
By Barnaby Phillips, Al Jazeera Blogs, March 24th, 2011.

[...]

I've sensed this mood before; it reminds me of Greece, in the first months of 2010, as the country slid towards bankruptcy.

[....]

In some senses, Portugal is in an even worse situation.

It's true that Portugal's overall debt and budget deficit are smaller than Greece's.

It's also true that its banks are in better shape than Ireland's, or Spain's.

But the economic problems here run very deep; the labour market is inflexible, and there's little innovation.

Today I visited an IT company run by a group of young Portugese entrepreneurs.

They were all extremely bright, capable people, and their company is doing well.

But they told me of their anger and sense of alienation towards the country's politicians, and their sense of despair as they see more and more of their counterparts looking to emigrate to northern Europe or the United States.

Today Lisbon's metro was on strike. Yesterday it was the ferries. Tomorrow it will be the trains.

A growing tide of industrial unrest, as austerity measures get tougher?

Perhaps, although Lisbon does not have the tradition of dramatic street protest of Athens.

So where do we go from here? [....]

dagblog - Comments for "Portugal edges toward bailout after govt quits"

Moody’s downgrades debt of 30

A Nation of Dropouts Shakes