Moody’s cuts Greece; “We’re not nearly as gloomy as others in the market”

Moody’s today cut Greece sovereign debt to ‘junk’ status, citing threats to growth.

“If they still need to take additional measures to reduce the debt because of slow growth, that would be a difficult political decision … because obviously that entails still more sacrifice on the part of the population,” Moody’s told Reuters. 
And that’s the whole point about the current approach: No growth. The market cares about debt in relation to GDP. If the denominator is falling, you’re making no progress. Krugman and Kevin O’Rourke make the point very cogently. 
Moody’s also told Reuters: “We’re not nearly as gloomy as others in the market.”

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