Tyler Cowen had just e-mailed me about the probability of an imminent downgrade of France when this Wall Street Journal alert arrived in my mailbox:

Standard & Poor’s could announce downgrades in the credit ratings of a number of European governments as early as Friday, said two people familiar with the matter.
One government official familiar with the matter said an S&P notice is being circulated among euro-zone governments and that an announcement “could be imminent.”
S&P declined to comment. The ratings firm had placed 15 euro-zone countries on negative credit watch on Dec. 5.
The euro tumbled to a fresh session low against the dollar in early New York trading, dipping below $1.27.

One of the countries on the chopping block is France, which could have serious consequences for the rest of the eurozone. According to Charles Forelle, a Brussels-based reporter for the Wall Street Journal, “A downgrade of France would cut EFSF lending capacity to €293 billion, of which ~€250 is claimed by GR, IE, PT.”

In other words, France’s troubles may be the final push towards the abyss for countries in already precarious shape.

I can’t say that I’m surprised. What did surprise me during my short visit to France last week was the French public’s seeming lack of awareness that things were really bad and could very quickly take a turn for the worse.

Update: Fitch confirmed France AAA rating for 2012. It means that it will make the reading of credit ratings even more obscure to most people than it already is. It also means that the current volatility in Europe isn’t about to stop. Overall, it is bad news.

While the downgrade was expected for several weeks, the CAC 40 just felt 1 point.

Update 2: Looks like the CAC bounced back.