Until this week, the fate of Europe seemed to hang on the decisions of three power brokers _ the president of France, the chancellor of Germany and the head of the European Central Bank.
Add a surprising fourth: Standard & Poor's, the credit rating agency.
S&P ripped into American politicians last summer for failing to address long-term debt and stripped the United States of its top-flight credit rating. Now it is essentially warning Europe to fix its debt problem _ or else.
Critics of S&P have questioned its credibility and relevance because it failed to foresee the collapse in the U.S. subprime mortgage market, which helped trigger the financial meltdown of 2008.
But what S&P says about the creditworthiness of European countries, or just about any other financial entity, still matters a great deal.
S&P rates companies and governments by their ability to repay debt. The higher the rating _ AAA is the highest _ the more investors trust them, and the less interest companies or governments have to pay to borrow money.
S&P threatened to lower its rating on 15 nations _ even Germany, the most powerful economy in Europe _ if their leaders don't agree on a tough response to the European debt crisis.
Borrowing costs for European countries were little changed after S&P's announcement, which came Monday night Europe time. But ratings cuts later could force countries to pay higher interest rates on the national bonds they issue to investors, creating a dangerous debt spiral and pushing them closer to default.
In a debt spiral, a country is forced to put aside an ever larger share of its budget for interest. That leaves less for everything else, and the country has to borrow even more to make up the difference _ or cut services, hurting the economy.
S&P's warning drew angry responses from some European officials who are scrambling to contain the crisis, and outrage from critics who say S&P plays an outsize role in markets.
"It still has enormous power," said Michael Lewitt, a former money manager who pilloried credit raters in his book "The Death of Capital." "I'm surprised it hasn't been throttled back by now."
The spotlight on S&P comes after it stripped the United States of an AAA rating for the first time in August, just after the prolonged debate over whether to raise the nation's borrowing limit.
S&P normally focuses on the financial resources of a company or government to pay back what it owes. But in the U.S. downgrade, it called out Congress and the White House for descending into gridlock over how to fix the nation's long-term debt problem.
Political considerations played a role in S&P's European downgrade threat, too. In a conference call Tuesday, Moritz Kraemer, head of S&P's sovereign ratings for Europe, said the agency is worried about paralysis in European decision-making.
Kraemer, whose division inside S&P issued the warning, told reporters Tuesday that previous efforts by European leaders "have not only been unable to arrest this crisis, but have arguably contributed to weakening confidence further."
He also acknowledged that the timing of S&P's warning was influenced by the importance of a summit of leaders of the European Union that starts Friday in Brussels, with the fate of the euro currency in the balance.
At that meeting, French President Nicolas Sarkozy and German Chancellor Angela Merkel will try to persuade the rest of the EU to adopt centralized controls over how individual countries set their budgets and how much they can borrow.
Already on Tuesday, there were signs that Britain would resist the proposal. France, Germany and 15 other countries use the euro currency. Britain and nine others do not. All 27 must approve changes to the EU treaty.
If the euro collapses, as some financial analysts worry it will, that could create a financial crisis reminiscent of 2008 _ severely restricted lending by banks, panic by investors, a worldwide recession.
"This is the time to turn the situation around," Kraemer warned.
In the run-up to the financial crisis, S&P and its chief rival, Moody's Investors Service, slapped their highest ratings on bundles of mortgages that were sold to investors as securities.
The result: Investors thought it was safe to buy the bundles and poured more and more money into them, inflating the housing bubble and making the eventual collapse that much worse.
The agencies have also been criticized for moving too slowly to downgrade risky companies, saddling investors with losses and the feeling they'd been duped.
One reason the agencies retain such power is that mutual funds, pension funds and other big investors are restricted from holding debt rated below a certain level. That means a downgrade can trigger selling, even by people who don't believe the countries or companies are any more likely to default.
S&P has taken a more aggressive stance than its two biggest competitors, Moody's and Fitch, both of which still have AAA ratings on U.S. debt and both of which have been much less vocal about Europe.
Some experts say that S&P is being aggressive now because it's trying to shore up its reputation after its many missteps.
"It's trying to get its mojo back," said David Kotok, CEO of money manager Cumberland Advisors. He was especially critical of the agency's decision to assess the politics behind fiscal dealmaking. "That's a foggy, fuzzy area."
Jan Randolph, director of sovereign risk for IHS Global Insight, which issues ratings on sovereign debt and is a competitor of S&P, said S&P appeared to be engaging in "a certain amount of overcompensation."
Raghuram Rajan, a finance professor at the University of Chicago's Booth School of Business, cautioned against reading too much into the S&P's motives.
"It's not their job to fix Europe's fiscal situation," he said. "Their job is of an observer who tells the investing public what any changes mean for the credit quality of European bonds."
Others say S&P's criticism reflects a conclusion reached weeks ago by financial markets, and evident in rising interest rates for European debt.
"There's sort of a no-duh aspect to S&P's decision," said Guy LeBas, chief fixed income strategist at Janney Capital Markets. He said that while the timing was unusual, "it certainly gives a kick in the rear end to some of the policymakers who have been slow to act."
In a conference call with reporters, S&P officials said it would be a conflict of interest to tell governments what to do. They said, however, that they may ask questions later to get details on any European debt agreement.
Rugaber reported from Washington.
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