Fitch Downgrades Spain's Credit Rating

Source: Wall Street Journal

Fitch Ratings removed Spain's AAA credit rating, dropping it by a notch, on expectations that the moves to cut the nation's debt will slow its economic growth.

The move came just a day after Spain's government had passed new austerity measures for this year and next, aiming to cut a budget deficit in the double digits of gross domestic product despite its likely effect of slowing economic growth.

Fitch Ratings removed Spain's AAA credit rating, dropping it by a notch, on expectations that the moves to cut the nation's debt will slow its economic growth.

Fitch said that despite Spain's strong commitment to cutting its budget deficit—including such measures as cutting civil service pay—government debt is likely to reach 78% of gross domestic product by 2013, compared with less than 40% before the onset of the financial crisis in 2007 and the subsequent recession.


Read more: http://online.wsj.com/article/SB10001424052748704596504575272641759918662.html?mod=WSJ_economy_LEADStoryTop

When you try to reduce deficits by reducing the income of those classes that typically spend the highest proportion of their income every month (the wealthy save, the lower classes spend) thats the result.

The result is even the wealthy make less (duh!).

Those Einsteins in the IMF (and conservatives here in the US) never thought that far ahead.

That means another global market lurch downward Monday.