What matters? Does a French bond downgrade matter?

At one point we would be down 2% in Europe and that would send us down 2.5% here because somehow our financials would get hit heavily, which would cause losses across the board. We would then spend all of our time fretting about it and what it means for the banks that own French paper. We would be focused on the prospects of Societe Generale to make it through this crisis and we would be speculating on which French banks wouldn't be able to meet their obligations. We would then focus on the money funds that have French paper and how this downgrade would send money out of French banks into Germany. It would then be the proximate cause for major handwringing about how France is going to go into recession and join Spain and Italy on the periphery.

Instead, we get a yawn. The French stock market is barely down. The big break-ins about the downgrade don't resonate.

What's happened?

First, many of the institutions that were teetering last year at this time have raised a lot of capital.

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Second, the ratings agencies don't have the clout they used to. The idea, for example, that if we miss our fiscal cliff by extending the cuts and taxes into a phase-in period will most likely bring a downgrade here. But the last one was followed up with huge bond buying, so the threat of skyrocketing interest rates didn't happen. It might happen, but it didn't. Same with France.

Third, at least when it comes to spillover to here, many of the companies that were perceived to be hostage to Europe at one time or another, beginning with the banks, have cut their exposure. The industrials have distanced themselves. The auto companies are cutting back. The whole thrust of the last year of international development was to make Europe a smaller piece of the pie. It's been working.

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Finally, the sheer length of time that this crisis has unfolded over has made it so people are ready for it. That, per se, makes it less of a crisis. Last year I was arguing for a kick-the-can strategy simply because kicking the can is the opposite of Lehman, which was a sudden end to the can kicking when no one expected it and look what that got us.

A lot of conventional wisdom has been stood on its head. France may ultimately slip into Spanish status. I don't know why not as it's a socialist country. But when it does, it won't pull us down. Our companies have had a chance to see it coming.

So have others.

The impact? It's been diluted. Not lost, just diluted. And that's enough to make it so that those who were short our markets off of a possible downgrade will not have much to show for it in today's trading.

Jim Cramer is a co-founder of TheStreet and contributes daily market commentary to the financial news network's sites. Follow his trades for Action Alerts PLUS, which Cramer co-manages as a charitable trust.

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