European leaders meeting in Brussels for a summit on banking rules got some bad news this morning. The Standard and Poor's credit rating agency announced that it is stripping the entire European Union of its AAA rating. The EU has been bailing out some of weaker countries and the downgrade is thought to be a comment on the donor countries' willingness to keep paying.
The timing of the announcement from S&P was particularly lousy for EU leaders, coming just a few hours after they trumpeted their success in stitching together a new deal on what to do with failing banks.
S&P's downgrade of the EU from AAA to AA+ is a reaction to the massive economic bailouts of weaker countries in the union. The ratings agency is concerned about the donor nations' willingness to continue feeding the 566 billion euro debt -- 80 percent of which went to Ireland and Portugal alone. S&P is especially alarmed because the level of debt is higher now than it was three years ago.