BERLIN, Germany — Investors, it seems, were remarkably unruffled by the long-anticipated downgrading of a string of European countries on Friday, and by the similar fate that befell the euro zone’s bailout fund, the European Financial Stability Facility, on Monday.
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In fact Spain, which dropped by two notches on Friday, had little problem raising €4.88 billion in a bond auction on Tuesday.
Yet Berlin was definitely not amused by the US-based agency’s decision, claiming that S&P had failed to appreciate the efforts being made in Europe to tackle the crisis. And the downgrades have served to reinvigorate Germany’s push for a European ratings agency to rival S&P, Moody’s and Fitch.
In an interview with the Neue Osnabrücker Zeitung, published on Tuesday, Foreign Minister Guido Westerwelle said that he intended to consult with his European counterparts on creating such a body. It was “high time” he said that the Anglo-American ratings agencies were given more competition.
And the minister even suggested modeling the new body on a German institution: The Stiftung Warentest, an independent foundation founded in 1964 to investigate and compare goods and services in an unbiased way.
Westerwelle said that Germany has had very good experience with the foundation. “No one questions its impartiality,” he argued, suggesting such a body could serve as an example of how to rate the creditworthiness of states.
He is not the only member of the government annoyed with the S&P snub. Finance Minister Wolfgang Schäuble questioned whether the ratings agency even appreciated the measures that were being taken to handle the euro-zone’s debt crisis.
"I don't believe that Standard & Poor's has really understood what we in Europe have already set in motion," Schäuble told public radio station Deutschlandfunk on Monday. "In addition, Standard & Poor's has perhaps not sufficiently examined measures undertaken to reduce deficits by all those countries in Europe that have been hit by difficulties."
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In fact the government may now attempt to reduce the role of the agencies by relaxing regulations that currently require insurance companies and funds to dump securities once the issuer loses the triple-A rating. Chancellor Angela Merkel said over the weekend that the current legislation was inflexible and self-magnifying. “It makes sense to take a closer look and consider where one could make a change to the law.”
Other members of Merkel’s conservative Christian Democrats (CDU) have been even more vociferous in their condemnation of S&P’s downgrade, with some perceiving a bias against Europe. Senior CDU politician Michael Fuchs suggested that the ratings agencies use different criteria in Europe than they do in the US and Britain, while Elmar Brok, a conservative member of the European Parliament, called the downgrades “almost the equivalent of a currency war."
However, not all of the German political class are ready to see nefarious motives behind the downgrading. "I don't believe in the conspiracy theories that the evil USA is trying to ruin Europe," Sigmar Gabriel, leader of the opposition Social Democrats, told Der Spiegel’s website. "The fact that the ratings agencies cause a lot of damage doesn't necessarily mean that Standard & Poor's assessment of the European situation is wrong."