california

Ralph Atkins

There was little new on ECB monetary policy from Jean-Claude Trichet, president, at his press conference – confirming that its main interest rate is firmly on hold. The introductory statement was virtually word-for-word the same as in December.

That left lots of time for questions on Greece, which clearly has a long way to go before it is back in favour in Frankfurt. Mr Trichet put the emphasis on Athens itself putting its finances back on course. He dismissed as “absurd” financial market chatter about Greece ever leaving the eurozone, and sidestepped questions about whether other European Union countries might help Greece out. “The problem is not to get help but to help oneself,” he argued. Read more

California’s $20bn budget deficit and looming cashflow problems have led Standard and Poors to downgrade the state’s general obligation bonds to A-. The ratings agency has given the bonds a negative outlook, suggesting further declines are possible. The cut brings the S&P rating more in line with that of Moody’s (Baa1) and Fitch (BBB) – and closer to that of Greece, which could help to explain the paradox Ralph outlined in December.

Ralph Atkins

Why is Greece such a big problem for the eurozone when the arguably far-worse financial plight of California is not raising similar concerns about the US or the dollar?

The question seems pertinent given the relative insignificance of the Greek economy – it accounts for less than 3 per cent of eurozone GDP (California provides about 13.5 per cent of US GDP). But I am not sure if I have yet heard a satisfactory answer. Suggestions I have heard include: Read more