Downgrades for Greek Debt

Here's the troubling thing about the ratings news on Greece, which was the subject of a downgrade by Standard & Poor's and a possible downgrade by Moody's. Once a credit starts to slide south, it is very difficult for it to take a turn for the better until some sort of crisis has occurred. There's no readily available data on the percentage of quick turnarounds versus the percentage of cases in which things get worse before they get better. But a quick turnaround, whether it's in the corporate or the sovereign sector, would require a solid plan and strong leadership with the support of the governed. None of those conditions are evident in Greece, where the government is at odds with its peers in the EU and an increasingly restive Greek public. The Greek government is blaming "speculators" for its problems and has just named a former Goldman Sachs official to the government. Goldman is the firm that is linked to credit instruments that appear to have hid the extent of Greece's budgetary troubles from investors.

A few weeks ago, Greece merited an obvious but apt reference to "tragedy." Today it seems that "comic," is just as obvious and just as apt. It could be a long way to the bottom for Greek credit and any parties with exposure to it.