I almost feel sorry for the credit ratings agencies.
Sure, their business model is fraught with conflicts of interest and the daily opportunity for ethical disasters. Maybe they totally underestimated the risk inherent in MBS and demonstrated a complete lack of ability to understand correlation, diversification and outliers. Sure, their ratings have been shown to lag market performance rather than lead it. And yes, they downgraded the US only to have yields decrease further.
But now that they are open to the risks in Europe, and the closer-to-home risks of apathy and not being on top of changes in risks of European sovereign bonds, now they get a tongue-lashing from politicians and anyone else with an opinion. Nobody likes to be downgraded, but that doesn’t mean the risks aren’t there.
I see this move as a more sensible move than many in the last few years, so I do feel a little sorry for them now.