The downgrade by Standard & Poor’s of US sovereign debt, from triple A to double A plus, was precipitate, wrong and dangerous.

At best, S&P showed a stunning ignorance and disregard for the potential consequences on a fragile global financial system. The rating agency chose to take this action after the worst week in US equity markets since 2008, a week which not only saw stocks fall sharply, but which also witnessed a dangerous escalation in the European debt crisis. The action was wholly unnecessary and the timing could not have been worse. Compounding this, the reasoning was poor and consequences, both short and long term, for the global financial system unpredictable.

It is unacceptable that privately owned, for-profit companies should have special, legally sanctioned status at the heart of the financial system to function as quasi-regulatory authorities whose opinions can determine what securities financial institutions can hold, how much capital they need, what the borrowing costs of every member of the system will be, all based on secret deliberations with no accountability.