Credit rating downgrade confirms failure of EU strategy: US media

WASHINGTON — The credit rating downgrade of France and eight other European nations by Standard & Poor's laid bare the failure of EU strategy to stem the spread of the public debt crisis, US media said.

"The decision by Standard & Poor's on Friday to downgrade the credit ratings of nine euro-zone countries, including France, Italy and Spain, should remind European leaders that their economic strategy based on austerity for all is just not working," The New York Times said in a stinging editorial.

"After umpteen rescue plans, Europe remains a long way from coming to grips with its mushrooming debt crisis," it added. France's "looming downgrade" from top tripleA credit rating to AA+ was "perhaps the worst-kept secret in finance," according to The Wall Street Journal.

"Like the US downgrade last summer, the rating changes themselves don't tell the world or the markets anything they didn't already know."

While the Journal stressed that it has long argued for reducing the influence of the ratings agencies, "S&P'S sweeping downgrade does reflect the truth that Europe's actions in trying to save the euro haven't stemmed contagion. They've spread it," the paper said.

The paper said loans to the weaker countries in the euro zone "haven't solved the crisis, and thanks to the guarantees, they've left relatively strong countries exposed to the weakest."

The New York Times lingered longer on the case of the "economic implosion" of Greece, which it said could default on a $19 billion bond payment as soon as March 20.

"Austerity is rending Greek society," and imposing further cuts "is becoming politically untenable," the Times said.

"It is time to shift course," it added. "Europe is in no shape to withstand the financial fallout of a disorderly Greek default, or its abandoning the euro. Greece is likely to need even more money than it has been promised so far."

The Times said Germany, which managed to hold on to its triple-a rating, "should realise by now that without growth its beleaguered neighbours will never be able to pay back their debts."

"Europe's problems have spiralled so far out of control that no one knows what policy mix will work," it added.

On its website, the Atlantic Monthly magazine highlighted that the downgrade could have a "very personal" cost for French President Nicolas Sarkozy, as he seeks re-election. — AFP