Six of world's largest banks downgraded

Road_Hog

http://www.londonlovesbusiness.com/news/six-of-worlds-largest-banks-downgraded/1289.article

The credit ratings of six of the world’s largest banks have been downgraded by Fitch due to the challenging financial markets.

London-based Barclays is among the banks to have its credit rating cut, along with France’s BNP Paribas and America’s Goldman Sachs and Bank of America. Swiss bank Credit Suisse and German institution Deutsche Bank also had their ratings downgraded by the agency. Fitch downgraded the banks’ “issuer default ratings”, which “reflect the ability of an entity to meet financial commitments on a timely basis”.

Generali

The French and German banks' ratings are also under threat from any Government downgrade. If memory serves their rating is 2 notches higher than their 'viability' (what their rating would be without an explicit and credible Government guarantee). If the guarantee becomes less credible, the ratings fall.

My fear has always been that we enter a feedback loop: banks being bailed out lead to Governments being unable to support their sovereign debt which makes bank assets fall in value which so banks then require further bailouts until everyone is rogered. That's what happened in Ireland and the process has now started in France and Germany it would appear.

alleycat`

Whilst i don't pretend to understand all the comings and goings of finance i find it hard to place credibility in these ratings agencies.

They might be right, at the moment, but where were they when it appeared obvious the wheels were coming off and money was still getting chucked about left right and centre?

TruckerT

alleycat` wrote: »

Whilst i don't pretend to understand all the comings and goings of finance i find it hard to place credibility in these ratings agencies.

They might be right, at the moment, but where were they when it appeared obvious the wheels were coming off and money was still getting chucked about left right and centre?

I reckon the ratings agencies are struggling to find some kind of status

But who do they need to convince - the Banks? ... the Politicians? ... the People?

World Power is as uncertain now as it was one hundred years ago - posters speak on here of the cyclical nature of economics, but the beginning of the 21st century is strangely reminiscent of the beginning of the 20th (according to my wife, who is actually that old...)

TruckerT