And you can expect a lot of red headlines in the days and weeks to come: Fitch Ratings took Spain’s sovereign debt down three notches today, as the cost of saving the nation’s enfeebled banking sector has reduced the government’s ability to respond to crisis and increased its vulnerability to contagion from the ongoing troubles in Greece. Said Fitch:
The dramatic erosion of Spain’s sovereign credit profile and ratings over the
last year in part reflects policy missteps at the European level that in Fitch’s
opinion have aggravated the economic and financial challenges facing Spain as it seeks to rebalance and restructure the economy. The intensification of the
eurozone crisis in the latter half of last year pushed the region and Spain back
into recession, exacerbating concerns over sovereign and bank solvency.