We've Just Witnessed A Major Turning Point In The Euro Crisis. Standard & Poor's decision to put 15 eurozone countries on downgrade watch threatens the fabric of programs that are meant to salvage the euro, in particular the European Financial Stability Facility (the euro rescue fund).
That fund has been at the heart of all plans to fix the euro to date. Now it's all but dead, and that may not be such a bad thing. With S&P threatening to cut France's rating by two notches, it's unlikely that S&P would refrain from making at least a one-notch cut to the country's sovereign rating. Moody's and Fitch have long been warning that they will follow suit. While we doubt that S&P—or any of the other ratings agencies—would actually go ahead with a ratings cut for Germany, the fact that the country is on downgrade watch is nonetheless troubling, particularly for the EFSF.
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