Junking the Ratings Agencies

Yesterday Ireland joined Greece and Portugal in the credit rating ‘junkyard’ as Moody’s downgraded its debt to Ba1 level. The agency also put the country on a negative outlook, meaning that further downgrades are likely.

Ireland’s response is one of understandable frustration, as it has until now been widely commended for ‘getting with the programme’ and implementing harsh austerity measures. More interesting is the furious reaction of EU leaders, perhaps reflecting the fact that recent downgrades are less a verdict on the Irish or Portuguese economies than a condemnation of Europe’s collective failure to get to grips with a crisis that still threatens to engulf its single currency.