Back in August, Standard & Poor’s downgraded the United States’ credit rating after the debt-ceiling fight and. . .nothing happened. Investors kept rushing to buy up U.S. debt anyway, in part because disruptions in the rest of the world made those periodic spats in Congress look sane and sound by comparison. Now S&P is intervening in Europe, announcing that 15 euro-area nations (save for the already-on-notice Greece and Cyprus) are all being reviewed for a possible downgrade, depending on what sort of deal to save the euro zone emerges this week. Might S&P make more of a difference here?


So S&P’s moves might end up having a bigger effect in Europe than it did in the United States. Is it appropriate for the ratings agency to try to pressure European leaders in this way? Bloomberg quotes a number of analysts who are getting tired of S&P’s constant attempts to inject itself in politics. “S&P should back off,” says one. “It complicates the job of the EU leaders to resolve the debt problem.”

In that vein, it’s worth noting that S&P doesn’t exactly give Europe much room to maneuver. In its reasoning for the review, the ratings agency notes that various euro zone countries are now perceived as increasingly risky, thanks to the market panic over the debt crisis. But S&P also argues that there’s a “rising risk of economic recession in the eurozone as a whole in 2012.” Over at the Economist, Buttonwood comments: “To an extent, the euro zone is damned if it does, and damned if it doesn’t. Failing to have a plan to reduce its debts will result in a downgrade but austerity plans will hit economic growth that will also result in a downgrade.”