By 3 News online staff
Europe's debt crisis is taking its toll on Germany, with credit rating agency Moody's announcing it has downgraded the economic outlook of Europe's powerhouse from stable to negative.
It’s fuelled by doubts about whether Germany can rescue the rest of Europe from the debt crisis.
Fund manager Anthony Quirk from Milford Asset Management says Moody’s decision to downgrade Germany is partly about restoring its own reputation.
“They and the likes of Standard and Poors actually contributed to the global financial crisis in the mid-2000s by giving some very poorly judged ratings, so they’re trying to now give a shot across the bows of Germany and give themselves some credibility,” he says.
But Mr Quirk says Germany is paying the price for backing struggling economies like Spain. He says that record yield rates on Spanish bonds of 7.5 percent are a sign it’s inevitable that Spain will need a full bailout.
“At 7.5 percent it’s just unsustainable,” he says.
“Two-hundred billion dollars was the initial amount they thought might help the Spanish banks out of their problems but it’s now quite clear that’s going to be insufficient.”
Anthony Quirk spoke to Firstline’s Rachel Smalley – watch the full interview.
3 News