It used to be that the financial ratings agencies hid their skepticism about the European Union's financial stability plans behind the credit downgrades.
The Fitch ratings agency is now reversing the process. It is saying flat out that the euro zone is incapable of producing a comprehensive solution to the debt crisis and therefore a succession of downgrades is imminent.
Those on the Fitch downgrade watch include the big economies of Italy and Spain as well as minor players such as Belgium, Cyprus, Ireland and Slovenia. A ratings downgrade means higher interest rates and greater difficulty in servicing existing debts, putting further pressure on the Eurozone.
The debt situation is compounded by sluggish or nonexistent growth. France, the second largest economy after Germany, warned that it was facing a temporary recession.
Ireland, the second country to receive a bailout, saw its GDP contract. The country's deputy finance minister was quoted as saying on Sunday that Ireland would need a significant reduction in its debt burden in order to get any referendum on new European budgetary rules passed. Ireland, at the very minimum, would need an extension of its repayment terms.
"The idea that we could have a referendum without that agreement, or a substantial re-arranging of our debt, wouldn't fly."
However, there is little chance that the terms of the Irish bailout can be renegotiated in short order.
Spain, under the new Popular Party government, found that its apprehensions were proven correct. Prior to the regional elections, the socialist-run regional governments had piled up a deficit that was 22%, vitiating cutbacks made by the central government.
There is little time to make the latest agreement stick before politics tears it apart. French Socialist opposition candidate Francois Hollande said Friday that only the European Central Bank has the power to save the euro. This is totally opposed by the Germans and Angela Merkel. Hollande told the Wall Street Journal "Everyone knows that without a powerful intervention by the ECB, it will be impossible to restore calm on markets."
Fitch basically agrees with Hollande claiming that the ECB's "continued reluctance to countenance a similar degree of support to its sovereign shareholders" is holding back recovery and until something changes, the "crisis will persist and likely be punctuated by episodes of severe financial volatility."
Things were difficult enough when France and Germany agreed. It is much worse when they take opposing positions.