By Ray Fleming

THE American credit rating agency Standard & Poor's (S&P) is in trouble again for its decision to review the ratings of all members of the euro-zone, including France and Germany.

The main task of S&P and the similar companies Moody's and Fitch is to prepare credit ratings for businesses and institutions considering investment which find it convenient to pay them for the necessary research.

Their involvement in the financial health of nations is relatively recent and in this space in July and mid-November I asked whether it was right that they should do so without any regulation of their activity or independent assessment of the standard of their work.

S&P downgraded the United States in July because of its “doubts on effective stability and predictability of US policy-making”.
Moody's down graded Portugal to junk status in July while it was in negotiation with the IMF and EU for a bail-out, and now S&P intends to pass judgment on the whole of euro-zone. Perhaps this should be done -- but not by a company that gave Lehman Brothers AA rating in 2008 when it was on the verge of collapsing and taking much of the financial world with it.

In November it panicked the markets by announcing it had downgraded France from AAA to AA but two hours later corrected its error.

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