Maybe it's too paranoid-delusional to expect that top executives
at Standard & Poor's are massively short the global equities
market - but the U.S.-based rating agency does seem to take a
macabre glee in prodding the world
towards the brink of crisis.
Back in August, it
the U.S. government's sovereign
rating, bumping it one notch below the top AAA level. That move
precipitated massive jitters in
markets around the world, though it ironically compressed
yields, which tenaciously clung to their status as the haven
of last resort. The Senate even
at the time to investigate S&P for potential wrongdoing or
. The agency already faces criticism for its abysmal record of
-backed securities in the buildup to the 2008 financial crisis.
The agency also took aim at Greece, Italy and Spain this year,
knocking down their ratings a peg or two and exacerbating further
Now S&P is gunning for an even bigger buck - the continent of
ratings of 15 eurozone nations on "CreditWatch with negative
implications" in a new
on Monday, threatening the AAA ratings of Austria, Finland, France,
Luxembourg and the Netherlands. It even added Germany to the list,
taking aim at probably the most credit-worthy nation in the world.
Stock futures hung near the balance point, with
Industrial Average index futures down 5 points, S&P 500 index
futures up 6.1 points and Germany's DAX index futures down 25
points at 6 a.m. EST.
There's no question that the E.U. has to get its financial house in
, which will inevitably mean shoring up the integrity of the whole
structure with the fiscal restraint and economic power of the
French and German economies. It's the political challenge of true
unification - making all of Europe responsible for each part - that
presents the most pressing challenge.
Henry Farrell, a professor at George
University, put the case succinctly in a recent book review of
The End of the West
published in the pages of The Nation:
"...Europe cannot survive for very long in an ambiguous zone where
it is being shelled from all sides," writes Farrell. "The EU either
needs to move backward, trying as best asit can to unravel the
weave of intertwining commitments that it has created around the
eurozone, or forward, toward a truly federal Europe. While moving
forward is immensely difficult, moving backward could be an
S&P's threatened downgrades could theoretically sharpen the
minds of the relevant European leaders, particularly Chancellor
Angela Merkel and President Nicholas Sarkozy. They're rather more
likely to send markets stampeding for the exits.