Wednesday, October 6, 2010

Euro Move: Ireland Downgraded Again

We said yesterday that the next move in the currency wars, likely in the form of a downgrade or crisis with the PIIGs.

Today Fitch has juts downgraded Ireland again, to A+ from AA-, putting it on a negative outlook, pointing to the bigger-than-expected cost of cleaning up the country's banks and uncertainty over economic recovery.

"The downgrade of Ireland reflects the exceptional and greater-than-expected fiscal cost associated with the government's recapitalization of the Irish banks, especially Anglo Irish Bank," Fitch said in a statement on Wednesday.

"The negative outlook reflects the uncertainty regarding the timing and strength of economic recovery and medium-term fiscal consolidation effort."

The ball is in Bernanke's camp now.

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