Yesterday there was a brief scare when some kind of glitch or error made it look like S&P had downgraded France.
The message went out briefly, but S&P quickly retracted it, though not before causing a selloff in French bonds.
Anyway, now Europe is furious.
French Finance Minister François Baroin called the mistake “shocking” and demanded an immediate investigation into the incident by European and French regulators. The French stock-market regulator AMF reacted by launching an investigation. The European Union regulator ESMA and the US Securities and Exchange Commission are also expected to look into the incident.
The gaffe could hardly have happened at a worse time. In recent weeks there has been speculation that France could lose its AAA rating as a result of French banks’ exposure to Greek debt. Furthermore, market nerves are particularly frayed at the moment given uncertainty over the political situation in Greece and the risk that the euro crisis could engulf Italy, the third-biggest euro-zone economy.
“Can you believe this?” one unnamed French official told the Financial Times. “This is not going to please people. … In the situation we are in at the moment, you can’t play around like this.”
Anyway, Europe has had it out for the ratings agencies for a while now, in part because of a shoot-the-messenger mentality.
This kind of glitch could be just the excuse they need.