All of Europe’s credit ratings could be in danger from the escalating debt crisis, Moody’s Investors Service said on Monday, and both banks and ratings agencies said that the eurozone itself is in danger of breaking up.
Saying that the political will to act will likely not emerge until after a series of disasters strikes, Moody’s said in a Reuters report that the result was likely to be a loss of market funding for eurozone countries and the need for a support program. Meanwhile, Bloomberg reported that both banks and ratings agencies were envisioning a breakup of the euro area, along with all the downsides that would entail.
Not just investors but institutions are growing far more wary of the debt crisis escalation since a bond auction by Germany met with low demand and higher yields. The possibility that the stalwart German economy may be in danger from the spreading contagion has drawn banks to comment that the end of the eurozone may be near. Deutsche Bank was quoted saying that the eurozone has entered “a new stage of the crisis” and Nomura said that a “far more dangerous phase” is beginning.