FRIDAY, January 13th, proved unlucky for nine euro-zone countries: they had their credit ratings cut by Standard and Poor's (S&P) soon after the American markets closed for the week. France and Austria were stripped of their triple-A credit rating. Three smaller euro-zone countries (Malta, Slovenia and Slovakia) also suffered a one-notch downgrade. Italy and Spain had their ratings knocked down by two notches (to BBB+ and A respectively), as did Portugal and Cyprus, whose debts are now considered junk by S&P.

Though grim, the news was not the blanket downgrade feared by eurocrats. In December S&P had given a warning of a possible downgrade to all euro-zone countries, bar Greece (which could fall no further) and Cyprus (which was already on the hit-list)—just days before leaders of the European Union met in Brussels to tackle the euro-zone crisis once and for all. S&P argues that their fire-fighting efforts have fallen short of what is needed, hence the downgrades. The December summit had "not produced a breakthrough of sufficient size and scope to fully address the euro zone's financial problems,” the ratings agency said in a statement.

According to S&P, EU leaders have misdiagnosed the euro-zone crisis. They have focused too much on tackling the increase in governments' budget deficits, which is only part of the problem. As a result, they did not pay enough attention to the deeper causes of the crisis: the divergence in competitiveness between the euro-zone's core of strong economies and its struggling "periphery" as well as the huge cross-border debts that stem from this gap. Reforms based solely on fiscal austerity could easily become self-defeating, notes S&P.

Although the summit's failures are shared, not all members of the euro zone have to bear the penalties in terms of lower credit ratings. Ireland has retained its investment-grade of BBB+. The ratings on Belgium and Estonia were also left alone. And crucially, S&P reaffirmed the triple-A credit ratings of Germany, the Netherlands, Finland and Luxembourg. There is no small irony here. Having identified the euro's internal imbalances as the main issue, S&P's own ratings favour the euro zone's saving gluttons who are part of the problem. These countries have persistently run current-account surpluses, and a surplus is an imbalance, after all. It seems that mercantilism has paid off—except in the case of Austria, whose economy is judged too close for comfort to trouble spots, such as Italy and Hungary.

France is neither thrifty nor competitive enough to be lumped in with the saving gluttons. Its downgrade was widely expected and in principle should already be factored in by forward-looking bond markets. Indeed the price of US Treasury bonds even rose (ie, yields fell) when S&P withdrew America's triple-A credit rating in August. French politicians are playing down the significance of the changes. "It is not good news…but it is not a catastrophe," was the response of the country's finance minister, François Baroin. S&P itself suggested that the downgrade was not the end of the world. Only three euro-zone countries are rated junk, it said. The rest are still investment grade and therefore very unlikely to default.

Yet so fragile is confidence in markets for euro-zone bonds that investors are unlikely to greet the ratings downgrade with a Gallic shrug. In the case of France, it is not only a blow to the country's prestige. It also tears a hole in the already threadbare euro-zone safety net, the European Financial Stability Fund. That is now backed by only four AAA-rated countries, which account for less than half of euro-zone GDP. The faith in euro-zone bonds is bound to be unsettled.

The S&P decision, however, may not even be the biggest source of anxiety. Talks between Greece and its private-sector creditors on the losses these should bear broke down on Friday afternoon. This failure raises the spectre of a messy Greek default. In such circumstances, investors might take a hint from the revised S&P ratings. If things go horribly wrong, Germany is now the only big euro-area bond market in which investors' money might be considered truly safe.