Greece. Italy. Spain. Ireland. Even France has experienced a wavering credit rating. But Germany?
Germany has been Europe’s voice of reason, a financial pillar among a creaky, malfunctioning continent with the financial foundation of a sand castle.
We previously asked whether Germany would have the stamina to lift up the rest of Europe or be dragged down by its bailout-addicted brethren.
One sign that Germany is being sucked into the European sinkhole is that Egan Jones just downgraded Germany’s credit rating from AA- to A+. Granted, Greece is unlikely to see anything near an A+ rating in our lifetime, but for Germany, it’s a stumble, if not a fall from grace.
It’s not that Germany is being irresponsible. It’s that its debtors are not paying up. According to zerohedge.com, “Germany is owed EUR700B of which perhaps 50% is collectible … Germany’s debt to GDP was 87% as of 2011. However, increasing Germany’s debt by EUR700B to EUR2.9T for its indirect exposures raises the adjusted debt to GDP to 114%.”
We can only hope that it’s not a sign of things to come. Yet, as an increasing number of European nations decide that they’ve had enough austerity, without so much as trimming a few vacation days, it’s unlikely that socialism will give way to pragmatism anytime soon.
In fact, Germany’s resistance to printing money as a way out of the sovereign debt crisis is increasingly making the country the odd man out in Europe, even though printing money is a sure path to hyperinflation.
Maybe Germany should leave the Eurozone instead of Greece.