Russell Jones - Westpac on S&P downgrade.

ex Chris Joye

"While S&P's assessments for each individual economy varied, there was one consistent thread in them all, and that was a judgement that there was an undue focus on fiscal austerity to the exclusion of growth-supportive measures. In essence, S&P was saying that the prevailing fiscal stance in these economies was making things worse rather than better. Interestingly enough, this also chimes with some recent but still incomplete IMF research that suggests that in the absence of growth, severe fiscal austerity programmes may elevate bond spreads rather than reduce them. It will be interesting to see how IMF policy towards the Eurozone evolves in the months ahead. Does it begin to take the same line as S&P?"