The downgrading comes at a time when Greece hoped it could sell its pension funds to raise billions of euros to pay for  upcoming interest payments.

 

April 28, 2010 (Hamsayeh.Net) - Global stock markets fell sharply on Wednesday after uncertainties over Greece’s economy led the market-grading agency Standard & Poor’s to downgrade the European country’s credit rating to junk level.

 

A junk level status is the lowest grade given to nearly bankrupt economies like the one in Greece with over 300 billion in international debt. The grading led to a sudden drop of markets around the world. Markets went down in Portugal %5.4 and Greece %6.7.

 

 In Asia the Tokyo Nikkei dropped around 2.5 percent, South Korea and Hong Kong stocks fell by 1 percent. In North America Wall Street’s Dow Jones fell nearly 2 percent and the US dollar raised against euro again by more than one percent.

 

The downgrading comes at a time when Greece hoped it could sell its pension funds to raise billions of euros to pay for upcoming interest payments on its massive debt by May 19. Germany has been reluctant to quickly resolve the issue by lending over 50 billion euros to Athens. Berlin says it’s waiting for public approval to go ahead with the loan.

 

Next in line after Greece, other European countries are also on the verge of similar crisis including Portugal, Spain and Italy amongst others. Greece’s financial troubles have the potential to spread across Europe and other industrial countries around the world thus creating another severe global recession soon after the 2008 recession.

 

Portugal's finance minister criticized the latest decision to downgrade the credit rating of Greece. Fernando Teixeira dos Santos said in a statement, ‘Regardless of the opinion we have in relation to the fairness and update of the rating, the fact is that this decision will not help markets to calm down, but will, on the contrary, contribute for their turbulence.’