Reasons Why An S&P Downgrade Is Good

I think that today's S&P downgrade of Europe is a non event. Everybody knew it was coming. That said, the market is stretched so it might use it as an excuse to correct. I believe that the S&P downgrade may even turn out to be a positive for the following reasons:

  • The news will soon be behind us.

  • The persistent downgrade rumors will end.

  • Now that only Germany is AAA, the EFSF can officially be put to rest. It is now even more painfully obvious that the ECB will need to participate in any rescue. The illusion that a rescue could be done without the ECB is harmful.

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