According to
Sky News
Standard & Poor's is about to downgrade France's credit rating, sources including the French news agency AFP are reporting.
They quote Reuters correspondent Peter Thal Larsen:
Reuters columnist Peter Thal Larsen told Sky News: "If we're talking about expectations then clearly France is what we would consider to be most vulnerable to a potential downgrade."
Mr Larsen went on to explain that a French downgrade would be significant due to the country's role as one of the AAA guarantors of the eurozone's rescue fund, the EFSF, which would in turn also need to be downgraded.
This would make it more difficult to raise funds to bail out weaker countries, like Italy and Spain, if the need arose.
Nobody quite knows what to do with the credit rating agencies. Their track record prior to the financial crisis is lamentable and their intervention, always very long-drawn out, tends to have negative effects on the market. At one point there was a proposal to silence them, which would not have the desired effect. The question is, will anybody go on listening to them as they downgrade one country after another?
On the other hand it is likely because of their previous lamentable record that they are now attempting (rather late in the day) to do their jobs properly, if only to save their crumbling reputations. Anyway, would anyone continue to listen to them if they did rate highly indebted countries as being "AAA"?
ReplyDeleteYou may well be right, AKM, about them trying to do their job properly but, really, is any of it news? And does it matter? The US lost its AAA rating last year. The world did not collapse.
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