"Germany could lose its AAA rating", reports Le Monde. On 23 July, the American ratings agency Moody's issued a negative outlook for the sovereign debt of Germany and two other European countries – the Netherlands and Luxembourg. It also announced its intention to re-examine the AAA rating that is still accorded to France and Austria, but which was flagged with a negative outlook in February of this year, "at the end of the third quarter".
The renowned German AAA, which is the last anchor of confidence in the eurozone, appears to be under threat from the difficulties in Southern Europe, remarks the French daily –
In support of its decision, Moody's explains that Germany, like the Netherlands and Luxembourg, has been affected by the worsening crisis and increasing uncertainty about the future of the single currency. Germany could be contaminated by its banks, which are judged to be "vulnerable" because of their "exposures to the most stressed euro area countries, particularly to Italy and Spain.
In Germany, Frankfurter Allgemeine Zeitung remarks that the announcement has "come at a critical time in the debate over further assistance to Greece, which has been heated in recent days" –
"For once, a ratings agency has got its timing right", notes the daily, because the arguments cited in support of the negative outlook highlight the danger posed by the crisis for Germany. The country is caught between two risks –
The first danger is a possible Greek exit from the euro zone which could contaminate other European countries like Italy. In Spain, the situation could get even worse. Then there is the second danger: if no country leaves the euro, the financially weaker countries will have to sustained by a long-term programme of transfers from stable countries. This is of concern to Germany, and also to the Netherlands and Luxembourg, states that Moody's has already placed on its watch list.
With this in mind, Frankfurter Allgemeine Zeitung concludes that the least harmful option remains a Greek exit from the euro.