Full S&P Downgrade

As you know France was stripped of their AAa status and downgraded 1 notch. This has obvious implications for the credit status of the EFSF bailout mechanism with the burden put squarely on Germany.


As somewhat expected, Cyprus, Italy, Portugal and Spain were cut by two notches.


Austria, Slovakia, Slovenia and Malta all received 1 notch downgrades (along with France).


The S&P said their actions were "primarily driven by insufficient policy measures by EU leaders to fully address systemic stresses".


All in all 9 of the 15 countries under review were cut. There has been a little political mud-slinging since the action. While some have expressed anger at the S&P accusing them of playing politics, others such as Germany' s Michael Fuchs, deputy leader of Merkel's CDU party said, 


"This step is out of order. Standard and Poor's must stop playing politics. Why doesn't it act on the highly indebted United States or highly indebted Britain?"


"If the agency downgrades France, it should also downgrade Britain in order to be consistent."


I would just point out to Mr. Fuchs, the S&P cut the US AAa rating a while ago.