BEIJING,
Jan. 14 (Xinhua) -- France was stripped of its triple-A credit rating on Friday
in a swathe of downgrades in the eurozone, which dealt a blow to the eurozone
members faltering in the debt crisis.
The
Standard and Poor's (S&P) downgrade move, though containing some legitimate
concerns, also raised fresh doubts over the credibility of ratings agencies.
France has
been struggling to secure its top-notch rating for months. After several rounds
of austerity packages and a massive economic overhaul, its overstretched public
finances showed no clear signs of easing up.
From this
perspective, S&P's downgrade is legitimate in some sense, but the timing is
dubious.
Just one
day ago, European shares and the euro rose on positive comments on the region's
outlook from the European Central Bank and the news of a successful Spain's
bond auction.
Meanwhile,
ten-year bond spread of debt-ridden countries over that of German has also
narrowed overtime, a key measure of investors confidence.
Spain,
Italy and some peripheral countries have waken up to the severity of their
structural flaws and introduced a flurry of financial measures to boost their
productivity.
As crisis
is showing tentative signs of receding, the S&P's overwhelming downgrade
has once again weighed on the market and dented investors' confidence.
Having an
estimated 95 percent of the global market for credit rating, the three ratings
agencies - Moody's, S&P and Fitch Rating, played a pivot part in providing
assessment of the ability of countries and companies to pay their debts.
For this
reason, it is of great importance for them to be objective and professional in
analyzing the market situation. Otherwise, their incorrect information on the
credit risk will inflict catastrophic consequences on the global market.
The 2008
financial crisis has provided such a cautionary tale. It is the failure of
ratings agencies to assess some risky financial products that contributed to
the spread of the toxic assets and fuelled the global crisis.
Meanwhile,
investors and markets should wane their over-reliance on assessment of the
credit ratings agencies and make their own judgements about the market
situation.
With great
power comes with great responsibility. In this connection, the ratings agencies
should use their power with caution to avoid becoming an ominous amplifier of
the ongoing sovereign debt crisis in Europe.
As global
investors should be warned about the major risks of the European debt mess,
ratings agencies should also do their honest job and not repeat their past
mistakes to win back the trust of global investors.
Editor: Fang Yang
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