Tag Archive: Greece


Entering a Death Spiral?: Tensions Rise in Greece as Austerity Measures Backfire – SPIEGEL ONLINE – News – International

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August 19, 2010

Source: SPIEGEL ONLINE

The austerity measures that were supposed to fix Greece’s problems are dragging down the country’s economy. Stores are closing, tax revenues are falling and unemployment has hit an unbelievable 70 percent in some places. Frustrated workers are threatening to strike back.

The feast of the Assumption of Mary on Aug. 15 is the high point of summer in the Greek Orthodox world. Here in one of the country’s many churches, believers pray to the Virgin for mercy, with many of them falling to their knees.

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The newspaper Ta Nea has recommended that the Greek government adopt the very same approach — the country’s leaders have to hope that Mary comes up with a miracle to save Greece from a serious crisis, the paper writes. Without divine intervention, the newspaper suggested, it will be a difficult autumn for the Mediterranean state.

This dire prognosis comes even despite Athens’ massive efforts to sort out the country’s finances. The government’s draconian austerity measures have managed to reduce the country’s budget deficit by an almost unbelievable 39.7 percent, after previous governments had squandered tax money and falsified statistics for years. The measures have reduced government spending by a total of 10 percent, 4.5 percent more than the EU and International Monetary Fund (IMF) had required.

The problem is that the austerity measures have in the meantime affected every aspect of the country’s economy. Purchasing power is dropping, consumption is taking a nosedive and the number of bankruptcies and unemployed are on the rise. The country’s gross domestic product shrank by 1.5 percent in the second quarter of this year. Tax revenue, desperately needed in order to consolidate the national finances, has dropped off. A mixture of fear, hopelessness and anger is brewing in Greek society.

Unemployment Rates of up to 70 Percent

Nikos Meletis is neatly dressed, and his mid-range car is clean and tidy. Meletis used to earn a good living at a shipbuilding company in Perama, a port opposite the island of Salamis. “At the moment, I’m living off my savings,” the 54-year-old welder says, standing in front of a silent harbor full of moored ships.

Meletis is a day laborer who used to work up to 300 days a year; this year he has only managed to scrape together 25 days’ work so far. That gives him 25 health insurance stamps, when he needs 100 in order to insure himself and his family — including his wife, who has cancer. “How am I supposed to pay for the hospital?” Meletis asks. Unemployment benefits of at most €460 ($590) per month are available for a maximum of one year — and only if he can produce at least 150 stamps from the past 15 months.

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Greece to probe U.S. banks’ role in crisis

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May 16, 2010

Source: Reuters

Greece may investigate U.S. investment banks and their role in the run-up to the Greek debt crisis which has shaken faith in euro zone economies, Prime Minister George Papandreou said in comments broadcast on Sunday.

Wall Street and major banks around the world are attracting scrutiny from regulators who are looking at transactions that occurred in the run-up to the subprime mortgage meltdown and financial crisis.

U.S. prosecutors are already conducting a broad criminal investigation of six major Wall Street banks to determine if they misled investors.

“We are right now having a parliamentary investigation in Greece which will look into the past and see how things went the wrong direction and what kinds of practices were negative practices,” Papandreou told CNN.

“There are similar investigations going on in other countries and in the United States … I hear the words fraud and lack of transparency. So yes, there is great responsibility here,” he said. Asked whether there was a possibility of legal action against the banks, he said: “I wouldn’t rule out that this may be a recourse also … but we need to let the due process proceed and make our judgments once we get the results from the investigations.”

The European Union and International Monetary Fund agreed a 110-billion euro ($140-billion) bailout of Greece a week ago after Greek bond spreads hit record highs which meant Athens could not service its debts.

The Greek government has been forced to make swinging spending cuts and hike taxes in an attempt to reduce its deficit from some 13 percent of GDP to the euro zone target of 3 percent.

Papandreou said his government had already cut its budget by 40 percent in the first quarter compared to last year and that revenues from VAT were also up by 10 percent.

But the measures are likely to come at a huge social cost and investors are watching closely the tide of anger and protests welling in Greece and looking to see whether Papandreou’s Socialist government will withstand the public pressure or go soft on the reform program.

But even as large protests regularly fill the streets of Athens, opinion polls show most Greeks believe the EU-IMF package was necessary to put the country back on track. Most however believe the burden is being unequally shouldered by ordinary people, while the wealthy and politicians prosper.

Papandreou said he was determined to succeed.

“What we are saying is that we are ready to make the changes. Greece is a proud nation, we have made our mistakes, we are living up to this responsibility, but at the same time give us a chance, we’ll show you,” he said.

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Greece to probe U.S. banks' role in crisis

Filed under: ECONOMIC COLLAPSE — Leave a comment

Source: Reuters

Greece may investigate U.S. investment banks and their role in the run-up to the Greek debt crisis which has shaken faith in euro zone economies, Prime Minister George Papandreou said in comments broadcast on Sunday.

Wall Street and major banks around the world are attracting scrutiny from regulators who are looking at transactions that occurred in the run-up to the subprime mortgage meltdown and financial crisis.

U.S. prosecutors are already conducting a broad criminal investigation of six major Wall Street banks to determine if they misled investors.

“We are right now having a parliamentary investigation in Greece which will look into the past and see how things went the wrong direction and what kinds of practices were negative practices,” Papandreou told CNN.

“There are similar investigations going on in other countries and in the United States … I hear the words fraud and lack of transparency. So yes, there is great responsibility here,” he said. Asked whether there was a possibility of legal action against the banks, he said: “I wouldn’t rule out that this may be a recourse also … but we need to let the due process proceed and make our judgments once we get the results from the investigations.”

The European Union and International Monetary Fund agreed a 110-billion euro ($140-billion) bailout of Greece a week ago after Greek bond spreads hit record highs which meant Athens could not service its debts.

The Greek government has been forced to make swinging spending cuts and hike taxes in an attempt to reduce its deficit from some 13 percent of GDP to the euro zone target of 3 percent.

Papandreou said his government had already cut its budget by 40 percent in the first quarter compared to last year and that revenues from VAT were also up by 10 percent.

But the measures are likely to come at a huge social cost and investors are watching closely the tide of anger and protests welling in Greece and looking to see whether Papandreou’s Socialist government will withstand the public pressure or go soft on the reform program.

But even as large protests regularly fill the streets of Athens, opinion polls show most Greeks believe the EU-IMF package was necessary to put the country back on track. Most however believe the burden is being unequally shouldered by ordinary people, while the wealthy and politicians prosper.

Papandreou said he was determined to succeed.

“What we are saying is that we are ready to make the changes. Greece is a proud nation, we have made our mistakes, we are living up to this responsibility, but at the same time give us a chance, we’ll show you,” he said.

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Sarkozy forced Merkel ‘to back bailout’

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May 14, 2010

Source: TODAY online

French President Nicolas Sarkozy  threatened to pull France out of the eurozone unless German Chancellor Angela Merkel agreed to back the European Union bailout plan at a summit last week in Brussels, El Pais newspaper reported on Friday.

The Madrid-based newspaper cited comments made by Spanish Prime Minister Jose Luis Rodriguez Zapatero at a May 12 meeting of Socialist politicians. Spokespersons for Mr Sarkozy, Mrs Merkel and Mr Zapatero declined to comment.

France, Italy and Spain pressed the Germans to back the rescue at a May 7 meeting of euro-area heads of government in Brussels. Finance ministers hammered out the details of what became a record ?750 billion ($1.32 trillion) package of emergency lending facilities at an all-night meeting two days later.

According to El Pais, Mr Zapatero said that Mr Sarkozy demanded “the commitment of everyone, that everyone should help Greece, everyone according to their means, or France would reconsider the situation of the euro”.

Mr Sarkozy banged his fist on the table and threatened to quit the euro, which forced Mrs Merkel to cave in, Mr Zapatero told Spanish politicians, according to El Pais. “If at this point, given how it’s falling, Europe isn’t capable of making a united response, then there is no point to the euro,” the newspaper quoted the French President as saying.

On Friday, the euro slumped as much as 0.8 per cent to US$1.2433 in afternoon trade in Europe, sliding below US$1.25 for the first time since March last year. That is well below US$1.2755 before the leaders met last week as doubts grew that Greece would avoid default.

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Sarkozy forced Merkel 'to back bailout'

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Source: TODAY online

French President Nicolas Sarkozy  threatened to pull France out of the eurozone unless German Chancellor Angela Merkel agreed to back the European Union bailout plan at a summit last week in Brussels, El Pais newspaper reported on Friday.

The Madrid-based newspaper cited comments made by Spanish Prime Minister Jose Luis Rodriguez Zapatero at a May 12 meeting of Socialist politicians. Spokespersons for Mr Sarkozy, Mrs Merkel and Mr Zapatero declined to comment.

France, Italy and Spain pressed the Germans to back the rescue at a May 7 meeting of euro-area heads of government in Brussels. Finance ministers hammered out the details of what became a record ?750 billion ($1.32 trillion) package of emergency lending facilities at an all-night meeting two days later.

According to El Pais, Mr Zapatero said that Mr Sarkozy demanded “the commitment of everyone, that everyone should help Greece, everyone according to their means, or France would reconsider the situation of the euro”.

Mr Sarkozy banged his fist on the table and threatened to quit the euro, which forced Mrs Merkel to cave in, Mr Zapatero told Spanish politicians, according to El Pais. “If at this point, given how it’s falling, Europe isn’t capable of making a united response, then there is no point to the euro,” the newspaper quoted the French President as saying.

On Friday, the euro slumped as much as 0.8 per cent to US$1.2433 in afternoon trade in Europe, sliding below US$1.25 for the first time since March last year. That is well below US$1.2755 before the leaders met last week as doubts grew that Greece would avoid default.

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The World’s Fiat Currency System Risks Collapse

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May 10, 2010

Source: National Inflation Association

On February 12th, NIA released an article entitled, “Greece Distracting from Real Debt Crisis in U.S.” in which we said, “We hope that Greece doesn’t get bailed out, because a bailout would cause foreign investors to become more irresponsible than ever and create even greater moral hazards. Unfortunately, not only is it likely that Greece will get bailed out, it’s possible our own Federal Reserve will get involved. The U.S. Federal Reserve has the ability to make loans to foreign central banks without disclosure to the U.S. public. European banks have already benefited $50 billion from the U.S.’s bailouts of AIG, so it’s not out of the realm of possibility that the Federal Reserve will intervene due to euro-zone countries being key U.S. trading partners.”

NIA was right, late Sunday evening the Federal Reserve announced the re-establishment of U.S. dollar liquidity swap facilities with foreign central banks, as a part of the European Union (EU)’s nearly $1 trillion bailout plan. The Federal Open Market Committee has authorized swap lines through January 2011 with the Bank of Canada, the Bank of England, the European Central Bank (ECB), the Swiss National Bank, and the Bank of Japan.

While the Federal Reserve may say these swap lines are necessary “to help improve liquidity conditions in U.S. dollar funding markets and to prevent the spread of strains to other markets and financial centers”, NIA recognizes that this is nothing more than another transfer of wealth from the American middle class to bankers around the world through inflation. This program was originally enacted in 2008 when the Federal Reserve loaned $582.8 billion to foreign central banks without any disclosure of which central banks got the money.

NIA believes it is unconstitutional for the Federal Reserve to make loans to foreign central banks. Most likely, the Federal Reserve was pressured by Wall Street to re-establish the swap facilities because Bank of America, Citigroup, JP Morgan, Goldman Sachs and Morgan Stanley have about $2.5 trillion in exposure to Europe, and Wall Street doesn’t want to see their bets go bad.

Not only will Americans now be exposed to the European debt crisis through the Federal Reserve’s swap lines, but the U.S. will be giving money away to Europe through the IMF. The IMF is contributing up to 220 billion Euros as a part of the bailout, which equals $283.1 billion at the latest exchange rate. The U.S. represents approximately 20% of IMF funding, which means the bailout is costing U.S. taxpayers $56.7 billion, not including the potential losses from loans made by the Federal Reserve and the inflation it will create.

The moral hazards of the EU bailout are immeasurable. It sets a dangerous precedent that the ECB won’t allow any eurozone nations to fail, just like the Federal Reserve won’t allow any major financial institutions on Wall Street to fail. Eventually, if you don’t allow the free market to punish countries and financial institutions that recklessly speculated and made poor financial decisions, the financial crisis we are preventing will turn into a currency crisis that the western world will never be able to recover from. Although NIA still believes the U.S. dollar will win its race to the bottom with the Euro, we are now at risk of a total collapse of the world’s fiat currency system.

Imagine if baseball teams weren’t allowed to fail. You probably remember playing t-ball as a kid and at the end of every game, both teams were declared the winner. Think about what would happen if Major League Baseball declared there will no longer be losers at professional baseball games, both teams will be declared the winners of every game. Would you still pay $300 for a ticket to see a Major League Baseball game? Of course not, the value of the tickets would collapse to nothing, similar to how fiat currencies will soon lose their purchasing power if we don’t allow countries and financial institutions to fail.

NIA is almost done producing its nearly hour-long documentary ‘Meltup’. We spent quadruple the time and money producing Meltup than we did producing our previous critically acclaimed documentary ‘The Dollar Bubble’, which has already surpassed 710,000 views since November 23rd. We believe Meltup will be the best economic documentary ever produced in world history and a must see for yourself, your friends, and your family.

Last week, NIA conducted an hour-long interview with Gerald Celente, founder of the Trends Research Institute. We can honestly say that our interview with Mr. Celente was the single most shocking, insightful and informative interview we have ever witnessed or heard. NIA will be using footage from our interview with Mr. Celente in Meltup. We highly recommend that you visit Mr. Celente’s Trends Research Institute web site at http://www.trendsresearch.com and subscribe to his Trends Journal. We just got done reading his latest Trends Journal and it is one of the most compelling pieces of journalism we have ever come across.

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The World's Fiat Currency System Risks Collapse

Filed under: ECONOMIC COLLAPSE — Leave a comment

Source: National Inflation Association

On February 12th, NIA released an article entitled, “Greece Distracting from Real Debt Crisis in U.S.” in which we said, “We hope that Greece doesn’t get bailed out, because a bailout would cause foreign investors to become more irresponsible than ever and create even greater moral hazards. Unfortunately, not only is it likely that Greece will get bailed out, it’s possible our own Federal Reserve will get involved. The U.S. Federal Reserve has the ability to make loans to foreign central banks without disclosure to the U.S. public. European banks have already benefited $50 billion from the U.S.’s bailouts of AIG, so it’s not out of the realm of possibility that the Federal Reserve will intervene due to euro-zone countries being key U.S. trading partners.”

NIA was right, late Sunday evening the Federal Reserve announced the re-establishment of U.S. dollar liquidity swap facilities with foreign central banks, as a part of the European Union (EU)’s nearly $1 trillion bailout plan. The Federal Open Market Committee has authorized swap lines through January 2011 with the Bank of Canada, the Bank of England, the European Central Bank (ECB), the Swiss National Bank, and the Bank of Japan.

While the Federal Reserve may say these swap lines are necessary “to help improve liquidity conditions in U.S. dollar funding markets and to prevent the spread of strains to other markets and financial centers”, NIA recognizes that this is nothing more than another transfer of wealth from the American middle class to bankers around the world through inflation. This program was originally enacted in 2008 when the Federal Reserve loaned $582.8 billion to foreign central banks without any disclosure of which central banks got the money.

NIA believes it is unconstitutional for the Federal Reserve to make loans to foreign central banks. Most likely, the Federal Reserve was pressured by Wall Street to re-establish the swap facilities because Bank of America, Citigroup, JP Morgan, Goldman Sachs and Morgan Stanley have about $2.5 trillion in exposure to Europe, and Wall Street doesn’t want to see their bets go bad.

Not only will Americans now be exposed to the European debt crisis through the Federal Reserve’s swap lines, but the U.S. will be giving money away to Europe through the IMF. The IMF is contributing up to 220 billion Euros as a part of the bailout, which equals $283.1 billion at the latest exchange rate. The U.S. represents approximately 20% of IMF funding, which means the bailout is costing U.S. taxpayers $56.7 billion, not including the potential losses from loans made by the Federal Reserve and the inflation it will create.

The moral hazards of the EU bailout are immeasurable. It sets a dangerous precedent that the ECB won’t allow any eurozone nations to fail, just like the Federal Reserve won’t allow any major financial institutions on Wall Street to fail. Eventually, if you don’t allow the free market to punish countries and financial institutions that recklessly speculated and made poor financial decisions, the financial crisis we are preventing will turn into a currency crisis that the western world will never be able to recover from. Although NIA still believes the U.S. dollar will win its race to the bottom with the Euro, we are now at risk of a total collapse of the world’s fiat currency system.

Imagine if baseball teams weren’t allowed to fail. You probably remember playing t-ball as a kid and at the end of every game, both teams were declared the winner. Think about what would happen if Major League Baseball declared there will no longer be losers at professional baseball games, both teams will be declared the winners of every game. Would you still pay $300 for a ticket to see a Major League Baseball game? Of course not, the value of the tickets would collapse to nothing, similar to how fiat currencies will soon lose their purchasing power if we don’t allow countries and financial institutions to fail.

NIA is almost done producing its nearly hour-long documentary ‘Meltup’. We spent quadruple the time and money producing Meltup than we did producing our previous critically acclaimed documentary ‘The Dollar Bubble’, which has already surpassed 710,000 views since November 23rd. We believe Meltup will be the best economic documentary ever produced in world history and a must see for yourself, your friends, and your family.

Last week, NIA conducted an hour-long interview with Gerald Celente, founder of the Trends Research Institute. We can honestly say that our interview with Mr. Celente was the single most shocking, insightful and informative interview we have ever witnessed or heard. NIA will be using footage from our interview with Mr. Celente in Meltup. We highly recommend that you visit Mr. Celente’s Trends Research Institute web site at http://www.trendsresearch.com and subscribe to his Trends Journal. We just got done reading his latest Trends Journal and it is one of the most compelling pieces of journalism we have ever come across.

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Gerald Celente on Greece Riots

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May 8, 2010
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EU to Set Up Fund to Prevent Spread of Greek Crisis

Filed under: Economy, Political — Leave a comment
May 7, 2010

Source: Bloomberg

European leaders agreed to set up an emergency fund to halt the spread of Greece’s fiscal woes, seeking to prevent a sovereign debt crisis from shattering confidence in the 11-year-old euro.

Jolted into action by the sliding currency and soaring bond yields in Portugal and Spain, leaders of the 16 euro countries said the workings of the financial backstop will be hammered out before the markets open on May 10.

“We will defend the euro, whatever it takes,” European Commission President Jose Barroso told reporters early today after the leaders met in Brussels.

Europe’s failure to contain Greece’s fiscal crisis triggered a 4.3 percent drop in the euro this week and led the U.S. and Asia to rally around in a bid to prevent a global sovereign-debt crisis from pitching the world back into a recession.

European officials declined to disclose the size of the stabilization fund, to be made up of money borrowed by the European Union’s central authorities with guarantees by national governments. Finance ministers will meet at 4 p.m. tomorrow in Brussels to flesh out the details.

“When the markets re-open Monday, we will have in place a mechanism to defend the euro,” French President Nicolas Sarkozy said. “If you don’t think that’s significant, you haven’t been to many EU summits.”

Independent ECB

Barroso said he wouldn’t push the independent European Central Bank to, for example, buy government bonds. ECB President Jean-Claude Trichet accelerated the market selloff on May 6 by rejecting that measure.

With the euro facing its stiffest test since its debut in 1999, the summit — called to discuss longer-term efforts to coordinate economic policies — turned into a crisis-management session that dragged past midnight.

The euro slid to $1.2715 from $1.3293 during the week, and is down 15 percent since late November. European stocks sank the most in 18 months, with the Stoxx Europe 600 Index tumbling 8.8 percent to 237.18.

The extra yield that investors demand to hold Greek, Portuguese and Spanish debt instead of safer German bonds rose to euro-era highs yesterday. The premium on 10-year government bonds jumped as high as 973 basis points for Greece, 354 basis points for Portugal and 173 basis points for Spain.

Spreading Contagion

Europe came under pressure on a hastily arranged conference call of Group of Seven finance chiefs yesterday. All agreed on “the need for a clear, timely and strong response,” Canadian Finance Minister Jim Flaherty, who chaired the call, told reporters in Ottawa. “We hope to see a strong, early policy response in Europe.”

The spreading contagion also drew the attention of President Barack Obama, who said in Washington that U.S. regulators will examine the “unusual market activity” that on May 6 briefly drove the Dow Jones Industrial Average down by almost 1,000 points, erasing more than $1 trillion in wealth before the market bounced back.

In Brussels, German Chancellor Angela Merkel stepped up German calls for a closer monitoring of government finances and more rigorous enforcement of the deficit-limitation rules, originally drafted by Germany in the 1990s.

Europe will send “a very clear signal against those who want to speculate against the euro,” Merkel said.

Credit-Rating Authority

With the euro region’s overall deficit forecast at 6.6 percent of gross domestic product in 2010 and 6.1 percent in 2011, the vow to bring budget shortfalls back below the euro’s 3 percent limit echoes promises that have been regularly broken ever since governments in 1999 set a three-year deadline for achieving balanced budgets.

Plans for a European credit-rating authority are already under consideration at the EU Commission, the bloc’s Brussels- based executive agency. It also is investigating whether ratings companies such as Standard & Poor’s wield too much power over investors’ perceptions of governments.

Asked whether steps to stem speculation against government bonds would include restrictions on short sales or credit default swaps, Barroso said “some of the points you have mentioned will be contemplated.”

The political leadership of the $12 trillion economy also signed off on a 110 billion-euro ($140 billion) aid package for Greece negotiated by finance ministers last week. So far nine governments have cleared the way for funds to be sent to Athens.

Biggest Contributor

Germany, the biggest contributor with as much as 22.4 billion euros over three years, fell in line yesterday with endorsements in the lower and upper houses of parliament. A group of German academics filed a lawsuit to try to halt the payout.

A day after whisking a three-year, 30 billion-euro program of deficit cuts through parliament, Greek Prime Minister George Papandreou ruled out further belt-tightening steps for the time being, saying the point of the summit was to “reaffirm our confidence in our economies and our common currency and this I believe is a very important message for the global economic recovery.”

Europe’s unprecedented lending pledge has “proven insufficient to stop market contagion to the rest of the euro- zone periphery,” Michael Saunders and other economists at Citigroup Inc. said in an e-mailed note before the summit. “Different kinds of solutions are necessary to fix the underlying problems of the rest of the euro periphery other than Greek-style packages, and these are unlikely to come in the very short term.”

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Greek Debt Downgraded to Junk Status..Ouch!

Filed under: Economy — Leave a comment
April 28, 2010

Source: NY Times

Financial markets on Wall Street and in Europe were rocked on Tuesday after Greece’s credit rating was cut to junk status by a leading ratings agency, deepening fears that a debt crisis in Europe could spiral out of control.

The ratings agency, Standard & Poor’s, downgraded Greece’s long-term and short-term debt to noninvestment-grade status and cautioned that investors who bought Greek bonds faced dwindling chances of getting their money back if Greece defaulted or went through a debt restructuring. Earlier, S.& P. reduced Portugal’s credit rating and warned that more downgrades were possible.

The downgrades, announced near the end of trading in Europe, overshadowed some positive corporate earnings reports and sent investors running for cover on both sides of the Atlantic.

Investors, worried about shock waves in the broader European economy, migrated away from the euro and pushed the value of the dollar and Treasury bonds higher. The cost of insurance against a Greek default rose sharply.

The major indexes on Wall Street posted some of their sharpest declines in more than a month. The Dow Jones industrial average fell 213.04 points, or 1.9 percent, to 10,991.99. The broader S.& P. 500-stock index fell 28.34 points, or 2.34 percent, to 1,183.71. The Nasdaq composite index lost 51.48 points, or 2.04 percent, to 2,471.47.

In London, the FTSE 100 closed 150.33 points, or 2.61 percent, lower, at 5,603.52. The DAX in Frankfurt lost 172.59 points, or 2.73 percent, closing at 6,159.51. The CAC-40 in Paris fell 152.79, or 3.82 percent, to 3,844.60.

The euro fell more than 1 percent, to $1.3184 from $1.3383 late Monday. Gold prices surged, while the Treasury’s benchmark 10-year note rose nearly a full point to 99 15/32 and its yield fell to 3.69 percent from 3.81 percent late Monday.

Edward Yardeni, president of Yardeni Research, said the downgrade of Greece presented a counterpoint to the scene in Washington, where current and former executives of Goldman Sachs testified before a Senate panel investigating Goldman’s bets on the mortgage market.

The Senate hearing quickly turned into a confrontation as senators from both parties challenged Goldman officials over their aggressive marketing of mortgage-based investments at a time when the housing market was already headed into decline.

An initial panel of four current or former Goldman officials insisted that they had done nothing to mislead their clients. Among them was Fabrice P. Tourre, a vice president at Goldman Sachs who helped create and sell a mortgage investment that figured in a fraud suit filed this month by the Securities and Exchange Commission.

Mr. Tourre, who was named in the S.E.C. lawsuit, defended his role in the sale of the investment. In his opening remarks to the Senate Permanent Subcommittee on Investigations, Mr. Tourre declared: “I deny — categorically — the S.E.C.’s allegation. And I will defend myself in court against this false claim.”

Goldman’s chief executive, Lloyd C. Blankfein, testified after the markets closed.

If the Goldman testimony represented a post-mortem of the recent financial crisis, Mr. Yardeni said, the ratings downgrade offered another signal of what could be the next crisis.

“This is a signal to the markets that the situation is deteriorating rapidly, and it’s not clear who’s in a position to stop the Greeks from going into a default situation,” Mr. Yardeni said. “That creates a spillover effect into Portugal and Spain and raises the whole sovereign debt issue.”

Among companies reporting positive earnings results were 3M, DuPont and United States Steel.

In economic data, the Standard & Poor’s Case-Shiller Home Price Index rose 0.6 percent in February compared with a year earlier. The increase was the first annual gain since December 2006, but the figure did little to help the market as monthly figures showed declines.

Consumer confidence showed a surprising gain. The Conference Board’s index for April rose to 57.9, up from 52.3 in March and above the 53.5 forecast by economists surveyed by Thomson Reuters.

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