Tuesday, July 5, 2011

Portugal downgrades Moody's to junk

Portugal's finance minister said today that the country needs financial aid from the European Union. As we've reported before, Portugal's borrowing costs have ballooned after credit agencies have repeatedly slashed its credit rating. Things got worse, after the country's Parliament declined to pass a set of austerity measures. That vote led to the resignation of Prime Minister José Sócrates.

The Financial Times reports that in a statement to the daily Jornal de Negocios Finance Minister Fernando Teixeira dos Santos said this outcome could've been avoided if credit agencies were held to the same standard of accountability as governments.

"Who needs Moody's?" dos Santos asked rhetorically. "What have they ever done? Portugal has produced wine, food, navigation and Brazil. The only thing Moody's has produced is paper, and a lot of that is self evidently shoddy."

The drama continues to unfold.