Standard and Poors Threatens European Downgrade

Sheila Dharmarajan discusses ratings agency's opinion of global markets.
8:24 | 12/06/11

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Transcript for Standard and Poors Threatens European Downgrade
Dow futures were up this morning ahead of the bell joining me now to discuss all the business headlines at this hour she without horizon from Bloomberg TV -- morning -- great to see you. Good morning Stephanie -- to be here so -- -- with some breaking news we got just about half hour ago Standard and Poor's is now warning it may downgrade the rating of the European bailout fund. This coming just a day after it threatened to lower the credit ratings of all fifteen Euro nations -- up. I think the two are really inter related to the fact -- the EFSF this is the European bailout plan which could be used to help your debt crisis. Maybe -- really has to do with the fact that the underlying countries of the countries are actually gearing -- money. In EFSF may -- downgraded that this is actually -- yesterday in terms of the fifteen European nations that may be placed on downgrade. Once again a lot of people saying it reminds them a lot of what happened -- the US was downgraded over the summer. If you -- S&P statement about why some of these nations may be placed on downgrade watch. It really has to do with -- European leaders can basically get their act together to decide how to help the region solve its debt -- that was one of the big concerns S&P has. And really one of the big reasons actually place these nations on downgrade watch now importantly if it got word happen remembered nothing is happening -- -- if it were to happen. France and Germany would actually be at risk of losing their triple -- read it stats that you see huge deal because of course those two countries have been really the linchpin of the year -- union plumber thing -- -- at nearly. People commenting on the timing of S -- -- move toward this downgrade much remember. If there is one theme for this week in the markets it is Europe Europe Europe really a string of meetings happening this -- and we did get some announcements -- Angela Merkel necklace are cozy yesterday talking about -- -- wanted to tighten some liberals in terms of how the European nations worked to get some very big meetings happening this week December 8 and ninth the European -- decide. How to solve the European nations debt crisis it. Timing certainly a -- curious let's talk -- market reaction because he said Dow futures up markets actually maintained those gains we are actually higher rate now. Reasons is seen and we hit the market solve a little bit right after the -- what was announced. Back up again and the reason is the market -- is thinking luck. Because this situation has heightened because. And -- -- a lot more pressure on nations to get the act together ever gonna have to act and that is giving the markets comforts -- a little bit patsy if you think about it. But certainly that's -- -- seeing a positive reaction right now in the market. And the US Treasury Secretary Tim Geithner -- Germany today meeting with some of the region's financial leaders influenced -- he brings with him. Yet Tim Geithner is meeting with -- dragging who have -- is the ECB president. -- to be honest his role at this point is really a supporting role you know he's been very vocal in terms of how important he thinks it is. For the year in -- -- solve their issues to come to a quick. Resolution for the debt -- is but frankly at this point his role is supporting. I -- -- the meeting will be a cluster meeting -- -- -- unclear what actually will go one in the meeting that we will be giving a press announcement around 11 AM our time. -- back here in the US senate Democrats are pushing -- for an extension of the payroll tax cut which is of course expected. Are supposed to expire at the end of the year they don't do something what do you see happening -- and how to markets are interpreting that. -- -- has really big and you know it's fascinating -- I was reading an article this morning saying that. If you take a look at the White House at press briefing room there's actually a clock -- -- that is actually counting. The pivotal test -- out you know if you go to whitehouse dot -- you actually see the countdown clock. Yes it is making it very clear that the expiration of these -- -- has tapped. The end of the year and really pressure on lawmakers to come -- resolution Baptist. He said we do you have democratic lawmakers who are pushing for an extension and -- -- -- tax Republicans are pushing back. Can't really where the -- comes on the one hand if you do you have the continued payroll tax is certainly some -- to revive our economy rate less taxes -- people Bayern players -- and Social Security. The better it is in terms of reinvestment into the economy and an ad in which you have a Republican -- we don't want to -- deficit anymore. Certainly I debt issues in the US here have been a very big deal and you know potential it's a potentially extending this parent attacks could -- that still. That's the rub between the two parties in this innocently democratic lawmakers are pushing for a tax returns and folks who make more than a million dollars year -- perhaps upset some of those -- issues. But -- -- and that is what is gonna happen for debate right now you know tens of economists in terms of -- -- the market reaction to this. People who we talked to say at this point we jets need resolution remember -- he -- -- -- -- can happen -- can plan around it -- -- -- around it it's really the uncertainty right that is killing the markets are killing economists in terms of how they clean their portfolio Hud can actually. In -- forecaster -- for the US at this point. Resolution of the issue is really the number one thing. It's almost built and that they expected there to meet gridlock in Washington they'll -- at this point that it almost -- That is a certainty they are not -- figure -- out. Which is. Possibly why we're not seeing -- huge market reaction ethnic outlets and a global some new developments in that collapsed and that we'll -- -- -- -- care is being pointed at former CEO Alan former New Jersey governor Jon Corzine. -- -- full story. He'll Wall Street Journal coming out today with a blockbuster article as saying that Jon Corzine was really directly responsible for -- Plenty of -- risky bets that MF global -- that eventually led the firm's liquidity and issues and eventually let the -- downfall. Now what's interesting is that the article actually points at the -- was well aware of these issues several months leading -- for the central infected chief risk officer. And the global -- Kuwait in January February of this year and one of his big concerns -- the concern was taking on. Too much debt ceiling it's really leading up to the fact that a lot of people inside MF global -- -- risky nature of their. Holdings they knew what exactly was happening there are flagged of their race. But no one really did anything about it you know how many actually heading over to Washington DC to Marta listen Jon Corzine's testimony on -- -- should be very very interesting. -- should be and I now you'll keep us updated. Apple because there are under investigation suspected. Of stifling competition details of that. Yesterday picking -- patrons watched is basically investigating apple announced -- five other book publishers. For a possible Clinton when it comes. What's interesting is that apple you know really started this e-book revolution. You know in January this year when it opened up its bookstore in Austin began selling ebooks over the iPad and now there's a lot of talk that they might actually been colluding are helping retailers set those prices -- -- Tennessee's stifling competition. What's fascinating about this case here is that apple. You know apple likes to do everything on its own terms and they really did when -- can -- -- is effectively -- the entire model on its head. And let publishers. -- let these guys actually said. Retail price -- -- And and you have the retailers -- actually ultimately determine the retail price. Now with this e-book and Apple's introduction of the iPad bookstore. Actually let publishers that is retail prices of huge investigation into whether that was actually the right thing to do it matter how much pollution is actually happening -- -- -- -- -- things are really underscores that is how pierce. Company to. In the e-book market -- -- apple iPad in the book story there. But remember him -- -- When it comes to downloadable ebooks and certainly that competition heating up -- S at a time Friday -- watching today Sheila. It's a very busy day hearing a lot of companies reporting earnings and actually came out with earnings was told parents and this is of course the -- -- Here's the good news they actually beat earnings they even say -- -- demand when he came to northeast corridors are really talking -- from Washington to Boston. Certainly some positive -- -- the housing market that is really -- one black marks in terms of this economic recovery so he did sign coming from children is there. He added that he is still -- -- Ian -- it himself a piece it you know look. Pump prices are still 60% from the highs that we sent the -- -- we are starting to see increased demand says Stephanie maybe -- When it comes to housing in case I get these states Sheila outcries from -- TV thanks so much have a great day -- tea.

This transcript has been automatically generated and may not be 100% accurate.

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