“As many of us expected, ratings agencies have started to down-grade the credit-worthiness of several Eurozone countries, including France. These agencies aren’t infallible of course (i.e., several of them were complicit in the mortgage scandals that caused the 2007-2008 financial crisis), but this event confirms that all the activity last year to bail out Europe’s finances haven’t convinced these agencies (or the markets) that the problem is solved.
Quite the contrary, in fact, which is why I think 2012 will be even rockier. And I can’t help but see the tragic grounding of an Italian cruise liner the other day as an apt metaphor for Europe’s dilemma. For in the end the problem facing the Euro also arose from poor navigation and incompetent command, as well as a failure to prepare for rough seas or unfortunate accidents. And if the Euro ends up on the rocks, the people who steered it there are going to end up with prominent places in the annals of modern history. And not in a good way.”