The downgrade put Greece on par with Romania and below Kazakhstan, Hungary and Iceland, the last of which rocked global markets when its main banks imploded at the start of the global financial crisis.
S&P also assigned a recovery rating of ’4′ to Greece’s debt issues, indicating its expectation of “average” (30-50 percent) recovery for debtholders in the event of a debt restructuring or payment default.
50 to 70% haircut?
To be honest I’m really not sure why the Greek Govt isn’t just saying “OK, game’s up”. Negotiate the haricut with the bond holders and get it over with.
Yes, they’ll still have the deflation, still be in the euro, but without the debt spiral.