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As the world struggles to come out of the European debt crisis, Ambassadors of Spain, Gustavo Manuel de Aristegui; Greece, Ioannis Raptakis; and Portugal, Jorge Roza de Oliveira, visited Mumbai last week and presented a united face on the survival of the euro at the Express Adda, taking a strong stance against the actions of rating agencies.
In a candid and informal discussion with bankers, industrialists and bureaucrats, they discussed a plethora of issues surrounding the euro, the austerity measures they were adopting, the economic growth in their countries and the way forward for the European Union. KV Kamath, non-executive chairman of Infosys and ICICI Bank, co-hosted the session along with Shekhar Gupta, Editor-in-Chief, The Express Group.
The Ambassadors later responded to questions from the audience, which included KC Chakrabarty, Deputy Governor of Reserve Bank of India; Nikhil Meswani of Reliance Industries; Hemendra Kothari of DSP BlackRock Limited; Jishnu Sen of Grey Group India and Nilesh Shah of Axis Bank
On credit rating agencies
Aristegui: Credit rating of some of our nations is simply not fair and unreal. Nobody can say that we are about to be downgraded to junk bond because it's simply not true. Spain can pay its obligation, and the spread — the difference that Spain has to pay for financing in comparison to German bonds — does not reflect the reality of the German and Spanish economies. Spain has a smaller public debt as compared to Germany, much lower than England and one of the lowest in Europe. I don't think that the ratings can be accurate, as when Lehman Brothers was just downgraded from AAA+ to AAA, they defaulted.
Raptakis: Something we have to blame Europe for is that we have not established a rating company of our own and rely on three US-based rating companies.