Downgrade of European Financial Stability Facility Becomes a Reality

“It won’t be long before the EFSF has its own credit rating cut,” we wrote yesterday. And it wasn’t! Standard and Poor’s delivered the coup de grace yesterday. It downgraded the European Financial Stability Facility from AAA to AA+, according to the Wall Street Journal.

This doesn’t change much in Europe. But it does point out a simple fact: Europe has government debts it can’t pay. It probably can’t grow out of them either. Raising taxes reduces growth. Printing money unleashes inflation. What to do?

The best idea would be to get rid of the Esperanto currency – the Euro – and start all over. Europe needs to get back to the basics of Western prosperity: free markets, private property, the rule of law, sound money, and political liberty. These worked pretty well for 300 years.

Then came the greed of the bankers, the hubris of the central planners, the pettiness of the bureaucrats, and mean-spiritedness of them all. We live in the age of debauched and corrupted capitalism. It’s no wonder so many people are unhappy.

But that is just the story of the Western world. As we pointed out yesterday, animal spirits are running high in India and China, with 2 billion upwardly mobile people. What’s more, you have two 5000-year-old cultures waking up from a century of uncompetitive slumber. Let’s hope there are enough resources for the both of them!


Dan Dennning
for Markets and Money

Dan Denning
Dan Denning examines the geopolitical and economic events that can affect your investments domestically. He raises the questions you need to answer, in order to survive financially in these turbulent times.

Leave a Reply

2 Comments on "Downgrade of European Financial Stability Facility Becomes a Reality"

Notify of
Sort by:   newest | oldest | most voted

Dan. If the EU does implode and there is a return to their previous currencies, how would the € be converted to those currencies?.
I have a personal interest in this, as I have a not inconsiderable sum in €’s,( I wish I didn’t,) with no way out.
I am sure there are others who would be interested in just such an article.

Bill Chapman

Dan Denning mentions “the Esperanto currency”. I do wish journalist and commentators would live Esperanto out of this. Esperanto is celebrating its 125th anniversary this year. It will be in use as an international language when the Euro is long forgotten.

Letters will be edited for clarity, punctuation, spelling and length. Abusive or off-topic comments will not be posted. We will not post all comments.
If you would prefer to email the editor, you can do so by sending an email to