Europe Downgraded

After Standard and Poor's credit downgrades today, nine European countries found their credit ratings lowered. France, Austria, Italy, Spain, Portugal, Malta, Cyprus, Slovakia and Slovenia all felt the effects of the latest slashing. Last summer the S&P struck down the United States from AAA to AA+, which is where France and Austria find themselves at now. Europe's strongest economy in Germany was left untouched at AAA. The European Financial Rescue Fund, which is mostly funded by the combined power of France and Germany, was left alone at AAA.

Stocks fell across European and US markets as the rumors of the downgrading began, and were only halted as they closed. French Finance Minister Francois Baroin declared that France has nothing to worry about when even "the United States, the world's largest economy, was downgraded over the summer". Portugal on the other hand, responded quite angrily blaming the S&P's own shortcomings for the credit lowering. And European Commission Vice President Olli Rehn stated that S&P failed to take all things into account and accused them of being biased.


The downgrading will likely make it harder for the various indebted members of the European Union to escape their current financial troubles, as now they will have to pay higher interest rates on their debt. Greece specifically is considered likely to default if they can not get out of their current woes. Italy however seems to be improving, though what effect their downgrade will have is yet to be seen. The United States may be risking seeing it's credit downgraded again, as President Obama has asked for another $1.2 trillion to be added to the debt ceiling.