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Sun-drenched Greece feels the heat

Wednesday, August 08, 2012 - 02:17

Aug. 8 - A downgrade from ratings agency Standard and Poor's has left analysts feeling lukewarm about Greece's economy, but that's nothing new so are downgrades losing their value? Joanne Nicholson reports.

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The heat is on in troubled Greece. An extreme weather warning has been issued over the high temperatures and now Standard and Poor's is trying to whip up a storm. The ratings agency has downgraded Greece to "negative" from "stable" saying it's likely to need yet more funding as the economy worsens. But does anyone need to take cover? Greece has been downgraded before, Angus Campbell, from London Capital Group, says this one won't make any difference. (SOUNDBITE) ANGUS CAMPBELL, HEAD OF MARKET ANALYSIS, LONDON CAPITAL GROUP, SAYING: "Everyone knows that Greece is under serious duress. Their borrowing costs are exceptionally high, they're in a very difficult situation and they're unlikely to be a member of the euro zone for all that much longer because in all honesty, they can't really go back to the market and they won't be able to for a substantial amount of time." The Greek stock market was finding it choppy in the wake of the downgrade. The country, governed since June by a coalition, is behind in meeting its bailout targets. And 3.2 billion euros worth of bonds, held by the European Central Bank, matures in less than two weeks. Greece says it will issue additional short-term bills to pay the government bonds, and hopefully avoid a default. Earlier this week ministers began drafting reforms to key government departments in order to speed up privatisation. Pasok party leader Evangelos Venizelos says they're still determined to stay in the euro . (SOUNDBITE) (Greek) PASOK PARTY LEADER, EVANGELOS VENIZELOS, SAYING: "We need to send a message of encouragement, a positive message and it must be made clear internationally that Greece is not a bad partner, it is not an outcast, and it cannot become the euro zone's sacrificial lamb." Greece is still waiting for the next instalment of aid. The so-called troika inspectors left Athens at the weekend after reviewing the books. They'll report back in September. Europe has promised to cover Greece's funding needs in the meantime but rhetoric coming from officials is becoming more ambiguous. Eurogroup President Jean-Claude Juncker now says while not ideal a Greek exit from the euro would be "manageable". Joanne Nicholson, Reuters

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Sun-drenched Greece feels the heat

Wednesday, August 08, 2012 - 02:17