Continued from page 1

U.S. borrowing costs have declined since the downgrade. But downgrades in Europe have had major consequences, driving up borrowing costs for nearly every nation, in some cases to levels that essentially forced nations such as Greece and Ireland into bankruptcy.

The loss of what remains of Europe’s top-notch ratings also would have important consequences for the emergency funding system set up last year to shore up and bail out the most debt-strapped countries. The most highly rated countries have acted as backstops for the European Stability Fund, and Greece, Portugal and Ireland depend on it for all their debt financing.

In issuing its warning to Germany, S&P alluded to Germany’s role in prolonging the crisis by blocking more strenuous efforts by the European Central Bank to aid the foundering economies of nations by purchasing their debt securities, as the Federal Reserve has done in the U.S., helping to lower borrowing costs for the government.

France and most other European nations have advocated a more activist role for the European bank, which alone has the financial firepower to calm Europe’s stressed debt markets. Unlike the Fed, the European bank often has stood on the sidelines while markets grew increasingly stressed.

“The lack of progress the European policymakers have made so far in controlling the spread of the financial crisis may reflect structural weaknesses in the decision-making process within the eurozone and European Union,” S&P said.

The seeming inability of European nations to take decisive action each time the crisis has taken a turn for the worse throws into question “the ability of European policymakers to take the proactive and resolute measures needed in times of financial stress,” it said.