The Euro Area has recently been swept by a hurricane called Standard & Poor's, and almost nobody spare, even France to the point of the main opponent of Nicolas Sarkozy, François Hollande, have stated that the fact that France has lost the maximum rating 'AAA' will weaken France's position in Europe. And it's the first time since there are rating agencies that France is no longer in the same place of Germany, which remains with the triple 'A', together with three heroic resistance: The Netherlands, Luxembourg and Finland.
Together with France, also Austria (whose capital, Viena, is now the city in the world with more quality of life) saw its rating cut from 'AAA' to 'AA+'.
And if the French people are concerned about the difficulties that France will now face when they negotiate with Brussels, what about the countries that saw their ratings go down right two levels? Namely: Portugal, Cyprus, Spain and Italy. The devastating consequences of this cut on the debts of many members of the European Union become right feel with the penalty of the EFSF. Now the EFSF is one of those involved in foreign aid that Greece, Ireland and Portugal requested. With the decline in its rating (from 'AAA' to 'AA+') certainly all come out more expensive loans to countries that have requested.
In addition, S&P could not have chosen "best time" to show that walks around which bird of prey in search of a poor bird that is already weak to follow the other, and thereby further weak will get and even harder will have to follow the flock.
It is that according to Bloomberg data, until March this year 17 members of the EU intend to carry out a total of 117 auctions of debt in order to find funding to pay a total of 441,7 billions to its financiers of the 1,398,000 million of responsibilities that the eurogroup will face this year).
The funny thing is that despite the success of debt auctions on Spain and Italy last weak and the slight optimism that the director of the ECB has given in the last meeting of the monetary authority, nothing seemed to matter at the time of this agency (which is not even European, as none of them are) cut the rating to nine European countries, and leaving 16 with 'negative outlook' (ie under observation with a possible lowering of it's rating).
Countries that saw its rating down on last Friday 6th January 13.
For speculators is how things work: however good (or reanonably good) news that may arise, they cling to bad news as a lifeline for what seems now that they love to do.
But what is more funny is the lightness with which theses cuts are often made when we talking about states. We are talking about sovereign nations, entities that have more credibility and should not be treated only by cold numbers.
But what is even more funnier, is the incredible subjugation that practically all countries of the world (those subject to the assessment of any of the three agencies) seems to have on the decisions of these entities. I believe in the competence and credibility of any of the agencies, and the qualifications of who makes these decisions, but again I refer: we are talking of sovereign states, and not mere gatherings of people.
This whole process is just speculation, that the rating agencies seem to play 'the dog and cat game' with the States, but often dropping the idea of leaving everything open for a rise soon.
The speculation was one of the problems that led to Japan would not become a major economic power this century, leading to the end of the Japanese miracle, and it seems to be doing the same to Europe.
The speculation was one of the problems that led to Japan would not become a major economic power this century, leading to the end of the Japanese miracle, and it seems to be doing the same to Europe.
Countries that remain with a maximum rating of 'AAA'.
It remains to States to decide which position will they assume and what they leave the rating agencies assume in all of this.
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