The financial crisis engulfing the eurozone took a fresh twist last night after Standard & Poor's cut the credit rating on nine eurozone countries, including France's AAA rating, and Greece's debt talks collapsed without agreement.
Below is some reation to last night's developments...
French finance minister Francois Baroin
"The United States, the world's largest economy, was downgraded over the summer. You have to be relative, you have keep your cool. It's necessary not to frighten the French people about it."
Charles St-Arnaud, Nomura:
"The French downgrade will be more political than economic. Now that France has lost its AAA status, it will give even more power to the German chancellor in negotiations."
Samarjit Shankar, Bank of New York Mellon
"We're starting to see big portfolio managers isolate the euro zone altogether and look elsewhere. They've by now discounted the fact that Europe is not going to get its act together."
David Woo, Bank of America-Merrill Lynch
"The good news is that since the start of the year, U.S. data has been reasonably strong. If that continues, it could make recession in Europe more shallow."
Scott Sherman, Credit Suisse:
"Over the long term I'm not really sure that it makes that much of a difference but when people see these negative headlines they'll move into the safety of US Treasuries."
Fabrice Seiman, Lutetia Capital (Paris)
"S&P is absolutely right. France is paying the price of 30 years of irresponsibility in public finances. French politicians on the right and on the left fell short of the job by not taking measures to reduce spending."
Bill O'Grady, Confluence Investment Management (St Louis)
"If France had been downgraded more than one level it would have precipitated a crisis. This is not good but it was anticipated, baked in."
Sony Kapoor, Re-Define (Brussels)
"S&P had given EU leaders fair warning but they have wasted the month they have had to change course and come up with a credible crisis resolution strategy. This action will probably lead to a series of bank downgrades next. The sovereign-bank dance of death continues."
S&P statement (extract)
"The outcomes from the EU summit on 9 Dec 2011, and subsequent statements from policymakers, lead us to believe that the agreement reached has not produced a breakthrough of sufficient size and scope to fully address the eurozone's financial problems.
We also believe that the agreement is predicated on only a partial recognition of the source of the crisis: that the current financial turmoil stems primarily from fiscal profligacy at the periphery of the eurozone. In our view, however, the financial problems facing the eurozone are as much a consequence of rising external imbalances and divergences in competitiveness between the eurozone's core and the so-called "periphery"."
**with thanks to Reuters, the Guardian, BBC
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