ALTHOUGH they have no official status the power of debt analysis agencies to influence the fate of nations is remarkable. On Tuesday one of the best known of these agencies, Standard and Poor's, cut Portugal's rating for the second time in a week to BBB- which puts it just one notch above junk status and lowered Greece to BB- which is three levels below investment grade. Greece's plight is of long-standing and repeated assurances by its government that it will reduce its deficit are being viewed with growing sceptism in the eurozone.
Portugal's problems are more recent and were precipitated into crisis last week when the prime minister Jose Socrates resigned after he failed to get a parliamentary majority for his national austerity proposals.
Portugal has persistently said that it would not need a European bail-out of the kind given to Greece and Ireland but it seems increasingly likely that it will have to ask for similar help quite soon. Ireland's rescue package came partly from the international Monetary Fund and yesterday Brazil's former president Luis Inacio Lula da Silva warned Lisbon not to do the same, saying The IMF won't save Portugal's problem, just as it didn't save Brazil's. Whenever the IMF tries to take care of a countries' debts it creates more problems than solutions. Many developing countries agree with that advice but sometime beggars can't be choosers.
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