Here comes S&P, throwing their opinions around with threats of a credit downgrade. I guess nation-states now know how Americans feel, being FICO scored over whether they shop at Walmart, literally being denied a job.

By now you're heard S&P has whipped out their weapons of mass destruction on 15 European countries. It's like the entire Eurozone just had war declared on them by Standard and Poors.

It's quite the bloodbath with Germany, France, Austria, Belgium, Ireland, Italy, Spain, Portugal, The Netherlands, Slovenia, Estonia, Malta, Slovakia, and even the frugal, we actually paid our WWII debt Finland being place on negative credit watches. A negative credit watch is a flip of a coin chance of being downgraded in the next 90 days.

The two other Eurozone countries, Cyprus and Greece are already downgraded, hammered by S&P.

What makes this political, is S&P has some policy prescriptions, they want to see, a new fiscal compact, or a fiscal union, i.e. Euro bonds. S&P has further requirements to come out from under their sovereign credit ratings thumb:

It is our view that national governments would need to continue to pursue reforms in order to bring production and consumption more into balance in their respective economies. For debtor nations, this will likely entail not only greater public sector savings but also measures that boost exports and increase the flexibility of labour, product, and service markets. As the European economy slows, we believe that a reform process based on a pillar of fiscal austerity alone risks becoming self-defeating, as domestic demand shrinks in line with citizens' concerns about job security and disposable incomes, eroding the revenue side of national budgets. We believe that a strong and credible commitment to a balanced reform agenda by governments whose bonds have come under particular pressure will furthermore likely be an additional prerequisite for the ECB to engage in a more aggressive
intervention policy. In principle, the fact that new governments have taken office (or are about to) in Italy, Greece, Spain, and Belgium could bode well for accelerated policy implementation. Nevertheless, we anticipate that the ECB will remain wary of moral hazard, especially following the perceived hesitance in the implementation of measures in Italy following the ECB's expansion of bond-buying to include Italian bonds in August 2011. This might make a significant front-loading of reform legislation in debtor countries another precondition for the ECB to deploy more of its monetary flexibility, complementing the governments' eurozone-wide policy response. For creditor nations, the rebalancing could, for example, entail not only greater EU fiscal transfers but also measures to raise productivity in the non-tradable sector, which could create demand without exacerbating external imbalances

S&P's threat of downgrades is right before a European summit, just 3 days away. The S&P quote above implies Europe, according to the world of Standard and Poor's rating services, should reduce further social safety nets, dump off worker protections, unions and magically all run export surpluses. Gee, howz that one gonna work? I guess America is always available as an export dumping ground.

Needless to say the fact a credit ratings agency is trying to put pressure on nation states to enact certain policies isn't going over too well. Bloomberg:

The move to tie ratings to the outcome of the summit drew criticism from European Central Bank Governing Council member Ewald Nowotny of Austria, who said in an interview that it “highlights the problem that rating agencies increasingly are assuming a political role.”
‘Increasingly Problematic’

“There is no doubt that rating agencies have an economically important role to play, but the way in which this is happening at the moment is increasingly problematic as it creates pro-cyclical effects, that means effects that make the crises worse,” Nowotny said yesterday in Vienna.

To show how well this is all goin', financial sites are trying to estimate value of sovereign currencies once the Euro is gone.