Earlier today, The Economist fired out the following tweet:
— The Economist (@TheEconomist) January 21, 2012
If you read the article, its a pretty good summary of several of the economic dynamics behind the current economic difficulties in the Euro zone.
It’s the type of analysis that you would expect from The Economist but I expect better than the tweet and lead paragraph.
What’s pretty clear is that the rating agencies are only now catching up with reality. The unlying economic trends and structures of the Euro are creating the problem. The rating agencies are only now reflecting that in their rating.
Let’s remember, these are the same agencies that didn’t see and couldn’t understand the banking crisis of the last few years either.
That is a criticism but it’s a mistake lots of people made.
The mistake that we should collectively stop making is to think that the rating agencies are in some way prophetic or that their actions are more than just another opinion on the present.
France’s economic weakness has changed the the balance of Europe. The Rating Agencies simply wrote the book.