Markets and investors will be only slightly surprised by the double downgrade bonanza at gin-o’clock on Friday evening as within 30 minutes three ratings agencies issued their updates. It will reinforce existing fears and outlooks, although none of the agencies is that specific on a fiscal crisis timing-wise. The point of downgrades, though, is that the risks are rising as the moment approaches.

Domestically there will be the usual uninformed hyperbole against the ratings agencies from the usual suspects. This is amusing and not always unwarranted. Why, for instance, was Moody’s so reluctant to cross the junk boundary but is it now so eager to cut again? It shows they had no understanding of the policy dynamic in recent years. Yet while ratings agencies are painfully backwards looking, often it is a useful crystallisation of views already in place among domestic and foreign investors...

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