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Because of the EURO crisis, Finland’s credit ratings may drop

Wednesday, 07 December 2011
Finland is the only Nordic country that uses the Euro and despite the fact that its economy is doing quite well, the U.S. ratings agency Standard & Poor's has warned Finland that its credit rating might be dropped along with the other euro area countries.

According to S & P 15 countries may see their credit rating dropped in a move that has infuriated the EU commissioners who blamed the credit for over reaching and at time when Europe is trying to seek a lasting solution to the crisis.

S&P said that if the countries do not reach results to stem the euro crisis at the EU summit this week, there will be not choice but to cut the rating.  But who cares about what the credit rating organisation say? After all they did not predict the most recent financial crisis. So how competent are they to determine the credit worthiness of any country?

It is true that the European leaders are not doing much as expected to boost confidence in the market so as to jolt the tolling EU economy. The European central bank has been accused of being too stiff not being able to be flexible enough to relax the too tight monetary policy.


Also countries that are having serious financial difficulties such as Italy, Greece, Portugal, and to a greater extent Spain are weak in competitiveness as well as a generous European welfare system that tend to reward laziness rather that  support creativity and entrepreneurship. Nothing in the various moves being taken to stem the crisis has pointed out to work in relations to making Europe more competitive.

This is why the governments that lack skills to deal with the crisis have tended to hit the poorer people more that the richer part of the population. The poorer ones who have been striking and demonstrating on the streets are the normal working class – those who work in public institutions, local governments, and low paid wage earners are seeing the pensions and savings quashed. Meanwhile the richer ones in governments and companies that used the system to make wealth, might have hedged their earnings in to tax havens are left untouched.
These Euro zone internal problems would surely negatively affect Finland, according to Standard & Poor's. If the financial crisis worsens, the Finnish banks also would find it harder to obtain foreign funding. The banks may also need support. According to the Finnish Ministry of Finance, the credit institution's warning means to pressure the EU to make a quick decision on the crisis.

Standard & Poor's will make decisions on real credit report situation after the Council of Europe meeting on Friday.

Germany and France pledged in a joint statement yesterday to do everything necessary to ensure stability in the euro area. Finland, Germany, France, Netherlands, Austria and Luxembourg, which belongs to the AAA rating class, are threatens to get their rating lowered to AA + class.

Of the 17 euro countries, only Greece and Cyprus are not threatened by lower credit rating. Greece's credit rating is already at the bottom and Cyprus is one of the countries that are kept under surveillance by Standard & Poor's.
By Team

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