Is S&P Trolling Europe?

I enjoy trolls, they are typically funny and add flavor to interactions. However, S&P seems to be taking things a bit far. It has put almost everything Europe related on Credit Watch negative, implying that everything is about to go to hell. While S&P has done its part to be as impartial one objective as possible, its history does not lend itself to accurate ratings.

S&P, along with Moody's MCO and Fitch Ratings came under fire in 2008 and 2009 when it was revealed that it gave subprime loans AAA ratings simply to garner business from financial institutions. Although the company has tried to be as honest as possible since those events, one cannot help but wonder if S&P is simply trying to be a trendsetter or fear monger.

In August 2011, S&P downgraded the United States' credit from AAA to AA+, marking the first time the US has ever been downgraded. Since then, the firm's CEO has stepped down, primarily due to public backlash. While the firm was not necessarily wrong about its call, this event further marred its public image. The US did not default, but simply increased its debt ceiling. While this essentially pushed the problem down to a later date, the public viewed S&P as making an unnecessarily rash call.

S&P could be right about Europe, that every single country and organization is less creditworthy than previously thought. However, it has to realize that it moves markets and the fact that it has put the EU, EFSF, and even Germany on Credit Watch negative is not a good thing for economic health.

One can only hope that S&P has screwed up its calculations and that the contagion does not affect every single European entity. Otherwise, the problem is bound to affect the rest of the world in an adverse manner, and will affect investors ranging from George Soros to the family next door.