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France stripped of AAA credit rating

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Borrowing costs will be higher but somehow the US managed to survive a downgrade. It's obviously not great, but worse things could happen. The bigger problem is the ratings agencies themselves. It was a missed opportunity following the initial part of the crisis when they were allowed to dismiss the real world implications of their ratings. If they're supposed to be useless, let's make them useless. But if they're going to be used and have an impact, they still need to be much more regulated so that they can't abuse the system as they did leading up to the 2008 crash. The Guardian:

S&P said austerity was driving Europe even deeper into financial crisis as it also cut Austria's triple-A rating, and relegated Portugal and Cyprus to junk status. The humiliating loss of France's top-rated status leaves Germany as the only other major economy inside the eurozone with a AAA rating, and rekindled financial market anxiety about a possible break-up of the single currency. S&P brought an abrupt end to the uneasy calm that has existed in the eurozone since the turn of the year by downgrading the ratings of Cyprus, Italy, Portugal and Spain by two notches. Austria, France, Malta, Slovakia and Slovenia were all cut by one notch.
Note from John: As an aside, check out the photo the Guardian is using with this article. It's from Getty Images, and it's been photoshopped, not very well in fact. Note the two clouds I circle:

It's an interesting question as to when, and how much, photoshopping is permissible in news photography.

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