European Crisis Eurozone debt fears intensify after Italy downgrade

Yesterday evening Standard and Poor's downgraded Italy's credit rating one notch to A/A-1, with a negative outlook. The agency explained it's decision with the fact that prospects of stimulating the country's economy in the nearest future are becoming less probable due to the Italian government's inability to handle the situation. Italy is the second most indebted country in the Eurozone after Greece.

According to the S&P official publication: “The negative outlook reflects our view of additional downside risks to public finances related to the trajectory of Italy's real and nominal GDP growth, and implementation risks of the government's fiscal consolidation program. We are lowering our long- and short-term unsolicited sovereign credit ratings on Italy to 'A/A-1' from 'A+/A-1+'.”

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S&P downgrades Italy on weak economic outlook

NEW YORK (CNNMoney) -- Standard & Poor's Ratings Services cut Italy's sovereign credit rating late Monday, saying the nation's weakening economic growth and political uncertainty have dented its financial stability.

S&P now rates Italy's credit at A, down from A+, and kept its outlook on the country as negative, the agency said in a report issued Monday.

"The downgrade reflects our view of Italy's weakening economic growth prospects," S&P said. "Italy's fragile governing coalition and policy differences within parliament will likely continue to limit the government's ability to respond decisively to the challenging domestic and external macroeconomic environment."

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Greek default: What it would mean

NEW YORK (CNNMoney) -- Experts agree it's almost certain that Greece will not be able to pay all of its debts. But if the country does default, what happens next?
Greek leaders are struggling to agree to a set of painful budget cuts, including layoffs and new taxes, in order to get the next round of bailout cash from its European partners. But Greece is in the midst of a painful recession, which is cutting tax collections and causing it to sink even deeper into the deficit hole.

And even if Greek and European officials can agree on deficit reduction measures, the bailout plans need to run a gauntlet of votes in 17 separate European parliaments. Last week, just the news that the Austrian parliament had failed to set a timetable for a vote sent European and U.S. markets sharply lower.

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Greece Is 'Dead Wood' in Euro Zone: Fund Manager

Greece should leave the euro zone in order to prevent the sovereign debt crisis engulfing major economies and threatening its very existence, a fund manager told CNBC.

"We need to move on from the dead wood in the euro zone because it is that dead wood which potentially is going to infect the whole piece," Henry Dixon fund manager at Matterley Asset Management told CNBC Tuesday.

"We have a chance now to contain it at Greece, maybe Portugal. Ireland has done a great job in dealing with its crisis. It's telling that there has been very little rhetoric about Greece," he said.

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Is default the next Greek tragedy?

NEW YORK (CNNMoney) -- The top grossing film at the box office this past weekend was a movie called "Contagion." It's a horror story. But no, it's not about the European debt crisis.
Stocks plunged in Europe Monday. Fears of a potential Greek default continued to scare investors following reports that German banks were preparing for such a possibility.

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