Here’s a thoroughly gloomy euro-zone round-up from Der Spiegel. It’s worth reading in full, but some highlights (my emphasis added) . . .
The new Spanish woes coincided with an announcement from Moody’s Investors Service on Tuesday night that it was cutting the outlook on its triple-A long-term rating for the EU’s temporary bailout fund, the European Financial Stability Facility (EFSF) to negative from stable, dealing a blow to one of the EU’s two firefighting funds. Moody’s also said late on Tuesday it would review German states and lowered its outlook from stable to negative for Baden-Württemberg, Bavaria, Brandenburg, North Rhine-Westphalia and Saxony-Anhalt.
The Bavarian downgrade will not have played well with the Bavariacentric (and rather more bailout-skeptic) CSU half of Angela Merkel’s CDU/CSU.
And the economic contagion is spreading:
Furthermore, in Germany, the important Ifo business climate index fell in July for the third month in a row, to 103.3 points from 105.2, reflecting companies’ concerns about the economic impact of the euro crisis and the cooling of the global economy. The drop was bigger than economists had expected.
“The euro crisis is increasingly burdening the German economy,” said [euroskeptic] Ifo President Hans-Werner Sinn. In June the Ifo index had already fallen 1.6 points to its lowest level in more than two years.