Tuesday, January 17, 2012

That precipice again

Rescue work was briefly suspended on the Costa Concordia yesterday after the vessel slipped deeper into the water. Although this was less than four inches, it transpires that the wreck is perched on a rock ledge and, with just a small movement, could plunge to the depths in water over 300 ft deep.

And already, we could not resist the temptation of drawing the parallels, but the similarities are getting to be uncanny.

Even while this testament to "continuing harmony, unity, and peace between European nations" was shifting its ground, rating agency Standard & Poor's cut its credit rating of the European Financial Stability Facility, the euro zone's rescue fund, by one notch to AA+ on Monday, three days after it cut the ratings of France and Austria by the same margin.

In a statement, S&P said the decision was all but inevitable following the cuts to the creditworthiness of France and Austria, which were two of the EFSF's guarantors. "We consider that credit enhancements that would offset what we view as the now-reduced creditworthiness of the EFSF's guarantors and securities backing the EFSF's issues are currently not in place," the agency said.

So there we have it. The euro shifted again yesterday – only a little bit, but it transpires that this wreck of a currency is perched on a rock ledge. Just a small movement could tip it over the precipice and plunge it to the depths. One of those small movements just happened ... the descent is just a matter of time.