News Links 11/24/2011

In a move that will shock no one, Standard & Poor’s has downgraded Egypt for the second time in five weeks. S&P lowered Egypt’s foreign and local currency sovereign credit ratings to ‘B+’ from ‘BB-‘ citing renewed political turmoil and the continuing depletion of the country’s foreign reserves.

The European Central Bank is looking at extending the term of loans it offers banks to 2 or even 3 years to try to prevent the euro zone crisis precipitating a credit crunch that chokes the bloc’s economy, people familiar with the matter say.

Germany’s own history shows that dictating economic decline to other nations only stores up trouble for the future

Fitch downgraded Portugal’s credit rating to junk status on Thursday, citing large fiscal imbalances, high debts and the risks to its EU-mandated austerity program from a worsening economic outlook.

One of the reasons for what was a failure of political leadership is that the central banks, grouped together under the European Central Bank, are the most important institutions in the eurozone. It is not in the nature of central banks to do political leadership. The Commission might have, but was ineffective — even unhelpful — in the beginning and must now try to claw back its previous position in the face of hostility from the big governments. The governments themselves are not only fractious, but disengaged to an extraordinary degree.

France and Germany agreed on Thursday to stop arguing in public over whether the European Central Bank should do more to rescue the euro zone from a deepening sovereign debt crisis.

As our overly-long headline tells you, Wednesday was a really bad day in credit land. Not only has the reality of the severity and seeming intractability of the Eurozone mess started sinking in, but US investors seem finally to be facing up to the fact that a full blown crisis would not be contained and will engulf American banks. If you thought September-October 2008 events were nasty, they could look like a mere trial run for what may be in the offing.

as bond yields in Spain and Italy sit just below the 7pc trigger point, and Ms Merkel talks of treaty changes and the impossibility of issuing eurobonds or hatching a plan that would fully engage the ECB, somebody in her cabinet should have a look over the brink. German and ECB brinksmanship, aimed at putting pressure on problem countries to introduce reforms, is beginning to turn back on the creditor nations. And Europe is walking a very high wire.

The curious anomaly is, as we have noted, if bunds are special, why is there poor auction demand, and why is noone borrowing stock? That is the mystery.

Standard & Poor’s raised the outlook on Iceland’s credit rating to stable from negative as the island’s economy returns to growth after emerging from its 2008 bank industry meltdown. S&P affirmed the ‘BBB-/A-3’ sovereign ratings on Iceland, the rating company said in a statement today. "Iceland’s economy is recovering from the systemic failure of its three largest banks, and has returned to positive economic growth after two years of severe contraction," S&P said in the statement.

LONDON (Reuters)- From credit bottlenecks in eastern Europe to slower growth in China, delays in tackling the euro zone’s debt crisis are causing ever-greater economic and financial damage well beyond

High street retailers are braced for an "austerity Christmas" after an influential Bank of England survey painted a gloomy picture of consumer confidence with Britons "going without" or "trading down" and raised fears that more store chains could go bust.

Big fall in salaries for average workers and sizeable rises for senior managers, says annual households earning survey

Europe’s plans for treaty changes to enforce fiscal discipline in the eurozone may fall foul of popular anger in Ireland unless the EU creditor states agreee to share more of the pain