Spain’s credit rating was just cut by S&P from AA+ to AA. The outlook is negative. The Euro just made new 12 month lows to 1.3137 on this breaking news. Why is this news important? The economic contagion is clearly spreading across the EU. Is Ireland next? What about the granddaddy of them all, that being the United Kingdom? Could the pressures within the EU actually cause some countries to leave and the EU monetary union to crumble?
The size of the Spanish economy, which is considerably larger than both the Greek and Portuguese economies, makes these developments very serious. Is there any doubt the domino effect is well underway?