Moody’s Ratings Agency has joined S&P in placing all EU countries on review for potential downgrade – not impressed by the measures taken at last week’s summit. While the summit did take some steps forward in terms of greater fiscal discipline/union, resolution will take time. Further, the whole deal could unravel or mutate into something else as Parliaments around the EU review the proposed treaty changes – some perhaps opting for referendum. The role of the European Central Bank (ECB) was conspicuous by its absence. Read: - “Will S&P Downgrade Eurozone?” -http://diplomaticallyincorrect.org/films/blog_post/will-sp-downgrade-eurozone-by-ambassador-mo/42375 Where is the European Central Bank? The ECB may in the long term become the “backstop” for Euro sovereign debt. We may also see in the future “Eurobonds” issued with explicit backing of the central bank or some common treasury/finance institution. However, that does not appear an option now, at least in part because it could also drag down the creditworthiness of the ECB and Germany. Regardless, this leaves the financial markets with the sense of an incomplete and uncertain project. It is déjà-vu or if you prefer “Groundhog Day” – Read: diplomaticallyincorrect.org/films/blog_post/groundhog-day-euro-crisis-trickling-to-us-economybusiness-by-ambassador-mo/42483 Not so Much About United Kingdom Opting Out as Ongoing Austerity/Uncertainty: While the opting out of the United Kingdom (David Cameron) out of the proposed treaty revisions has dominated much of the discourse since last week, and undoubtedly the political/diplomatic ramifications are yet to be defined for the future of EU institutions and intra-EU relations, the dominant concern in financial markets are EU economic and Euro prospects. Along with austerity, the recent uncertainty including on proposed treaty changes will be a drag on EU/Eurozone growth and the relative value of the Euro. From a relatively objective perch, Moody's downgrade warning highlights that the freeze on Europe persists despite the ray of optimism from last week's EU summit. Read: -“Is Eurozone or US in Greater Financial Turmoil”?” - diplomaticallyincorrect.org/films/blog_post/is-eurozone-or-us-in-greater-financial-turmoil-by-ambassador-mo/41996 By Ambassador Muhamed Sacirbey Facebook – Become a Fan at “Diplomatically Incorrect”

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