Credit-rating downgrades EU rescue fund, yet investors show confidence; Rating agencies critiqued as "neither accurate nor merely observers"; Chinese economy slows; South Korea latest to feel US pressure on Iran sanctions; Pakistani Supreme Court orders PM to appear, South Carolina debate draws fire at Romney; and more

Top of the Agenda: Euro Bailout Fund Downgraded

Credit rating agency Standard and Poor's downgraded on Monday the temporary eurozone rescue fund, the European Financial Stability Facility (Bloomberg), by one notch from its prized triple-A rating. The move came just days after the agency downgraded nine eurozone countries, including two of the fund's main guarantors, France and Austria. However, the EFSF fared well during a six-month debt sale (WSJ) today, signaling short-term investor confidence in the fund.

Analysis

"The agencies are neither accurate nor merely observers – yet they bully governments around the world and make billions doing so. The obvious solution would be to take this public service into public hands. Let's have a ratings agency run by the UN, funded by pooled contributions from both lenders and borrowers," writes the Guardian's Aditya Chakrabortty.

"S&P reaffirmed the triple-A credit ratings of Germany, the Netherlands, Finland and Luxembourg. There is no small irony here. Having identified the euro's internal imbalances as the main issue, S&P's own ratings favor the eurozone's saving gluttons who are part of the problem," argues the Economist.

"What Europe really needs is a regime that incentivizes staying inside the monetary union and cracking down when partners break the rules. A good analogy is a stock exchange. Firms join because they get access to low-cost capital. And they are willing to open up their books and accept certain performance standards in order to do so," writes Erik Jones on ForeignAffairs.com.

 

PACIFIC RIM

US Pressures South Korea Over Iranian Oil Imports

The United States called on South Korea to reduce its imports of Iranian crude oil as part of a wider US effort to sanction Iran over its nuclear program (NYT). Iranian crude comprises 10 percent of South Korea's oil imports.

With oil supplies tight, regions most vulnerable to oil supply disruptions present a significant economic concern, particularly Iranian threats to the Persian Gulf's Strait of Hormuz, explains this CFR Backgrounder.

CHINA: The economy grew by 8.9 percent (WSJ) in the fourth quarter of 2011, its slowest pace in over two years.

 

ELSEWHERE:

Supreme Court summons Pakistani PM to appear

Nigeria reinstates oil subsidy, ending strike

Republicans bid to undermine Mitt in final S.C debate

 

This is an excerpt of the CFR.org Daily News Brief. The full version is available on CFR.org.