S&P Downgrade Is Not News

The S&P downgrade is simply a public statement of what everyone already knows -- Eurozone debt is unsustainable. That France was included in the downgrade should surprise no one. Sooner or later the French government will be forced to absorb the balance sheets of the major French banks. The French are in as much trouble as everyone else.

Really important news will come when sovereign debt auctions begin to falter. That will happen. That will be the beginning of the end.

Far better is to face reality now and begin the "workout" process. But, politicians are loath to face reality on their own watch. So, don't look for anything good on the European sovereign debt front anytime soon.

But, the markets surely know all of this.

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