Moody’s decision to downgrade Spain’s sovereign credit rating from Aa1 to Aa2 was very unwelcome to the Spanish government yesterday, but it may have come as a timely reminder to other European leaders, meeting in Brussels today, that they are still a very long way from solving the sovereign debt crisis. Ever since the beginning of the year, the markets have been willing to give the benefit of the doubt to the European negotiators, believing that the Germans and the French had finally come to the view that some form of fiscal burden sharing was a better alternative, for themselves as well as for the troubled economies, than the risk of sovereign defaults, or worse still the break up of the euro. Read more
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