Losing AAA rating will cost us dearly

Credit reference agency, Moody, has downgraded the UK's AAA credit rating citing poor growth and a negative outlook on the UK's economy.

We can still afford to pay for
India's space programme can't we?

George Osborne says it doesn't really matter and Ed Balls says that the Tories should start spending even more money.  They're both wrong.

Balls is wrong because we're still spending too much.  "The cuts" aren't cuts in spending, they're decreases in the increases in spending.  The British government is still spending more money than we're paying in taxes and it's just not sustainable.

Osborne is wrong for the same reason.  We're borrowing money at an alarming rate and the cost of borrowing that money will go up as our credit rating goes down.  We're not in Greece or Spain's league where they're having to turn to the equivalent of payday loan companies but even the 0.16% increase in borrowing costs that we saw yesterday are cause for worry when our national debt is anticipated to grow by £120bn (to 98% of GDP) this year alone.  That 0.16% increase would cost us an extra £192m for this year assuming it doesn't go up in the meantime (and I would expect it to after the bad news budget in April).

Both Labour and the Conservatives are utterly useless when it comes to the economy because they're completely wedded to debt.  They know that simply borrowing more money to give it all away isn't going to fix a broken economy but they don't have the vision or the balls to do what is needed - slash taxes, slash public spending and get people working again.

German credit rating drops below Isle of Man

The international credit rating agency, Moody's, has put the German, Dutch and Luxembourgish economies on a negative outlook which threatens their AAA ratings.

Deutschland, Deutschland,
unter Insel Man

France and Austria have already been hit with negative outlooks from Moody's earlier this year.

The only countries left in Europe with a stable AAA rating are the Isle of Man, Denmark, Finland, Norway, Sweden and Switzerland.  Norway, Switzerland and the Isle of Man aren't members of the EU and the only €urozone country that has kept its AAA rating without a negative outlook is Finland which is hardly surprising given that Finland is the only €urozone country that has opposed fiscal union and bailing out Greece.

The latest effective downgrades from Moody's are in response to the increasing inevitability of the need to bail out Spain which will bankrupt even Germany.  As Spanish Treasury Minister, Cistobal Montoro, said in June: Spain can't be rescued.

Moody's downgrade four UK banks

The rating agency, Moody's, has downgraded four UK banks overnight, adding billions to their borrowing costs which will be passed on to customers.

HSBC, Barclays, RBS and Lloyds Banking Group have all seen their credit rating cut thanks to their exposure to the €urozone.

Yesterday we said that it was time to stop UK banks from making high risk loans to €urozone countries because of the damage it's causing to the economy.  Moody's downgrading the four biggest banks in the UK confirms that such a ban is necessary to protect the economy.

That said, it would help the economy if David Cameron stopped telling the world that we need to do whatever it takes to save the single currency because if it goes wrong we'll be doomed I tells ya, doooooomed.

Portuguese bonds downgraded to "junk"

The international credit rating agency, Moody's, has downgraded Portugal's credit rating to BA2 which gives their government bonds "junk" status.

Portugal is now on a par with the Phillipines, Macedonia and Egypt and has a lower credit rating than Barbados, Latvia and Estonia.  Even the Isle of Man has a better credit rating than Portugal and their main exports are students and Jeremy Clarkson (and he's not even Manx).

The euro house of cards is collapsing.  Greece has been bailed out and it's about to be bailed out again.  Greece's credit rating with Standard & Poor's is CCC - only 3 lower credit ratings exist, two of which are for bankrupts and defaulters.  Portugal is only 5 rungs up the ladder from Greece, hovering precariously above Albania and Mongolia.

Despite the spin and false optimism from the europhiles, be under no illusions that this is not a disaster for the eurozone.  Major eurozone economies are failing, their bonds downgraded to junk status and the cost of the loans they have to take out to pay for existing debt spiralling out of control.  The eurozone is bankrupt, its only assets are France, Germany and the Netherlands and even they can't afford to bail out half of Europe year after year.

The best thing the Greeks and Portuguese can do is ditch the euro, devalue their currency, slash interest rates and lower taxes.  In the case of Greece, they should default on their debt repayments - they literally can't afford to make the interest payments, the EU/IMF bailout is just a payday loan.