Financial contagion has continued it’s visible advance into the core of the 17 member Eurozone. On 19, September 2011 the S & P downgraded the Republic Italy’s credit rating to A/Negative/A-1 citing concerns regarding economic and political weakness. (1) (2) Since this report the Kingdom of Spain’s banking industry rating, has been downgraded to Group 4 (Group 1 is the strongest and group 10 the weakest). (3) Spain's resultant banking peer group includes the Czech Republic, Israel, Korea, Mexico, and the Slovak Republic. Both the Republic of France (AAA/AAA/AAA) and the Federal Republic of Germany (AAA/AAA/AAA) currently maintain their sovereign credit ratings (Local Currency Rating, Foreign Currency Rating, Transfer and Convertability Assessment), however the viability of France’s credit rating is being questioned in some financial quarters. (4) (5) (6) In the context of the third quarter of 2011, Standard and Poors has downgraded 119 credit issuers who have floated $3.1 trillion USD in debt. (7) Although history seems to suggest that select sovereign’s consider war as a viable way to solve economic problems, it is of interest to note that the G-20 can be viewed as actively seeking a political and economic solution (which may include focused action with respect to as many as 50 systemically important banks). (8)(9) Nonetheless, with respect to actual concrete solutions, skeptics and transnational institutions do not yet appear to be convinced. (10) (11)
(1) Republic of Italy, September 19, 2011, Global Credit Portal, Standard and Poors, http://img.en25.com/Web/StandardandP...licofItaly.pdf
(2) Italy’s Rating Cut One Level by S&P as Greek Crisis Fans Contagion Concern, By Jeffrey Donovan - Sep 20, 2011 8:58 AM MT, Bloomberg News, http://www.bloomberg.com/news/2011-0...bt-mounts.html
(3) Spain Banking Industry Country Risk Assessment Revised To Group 4 From Group 3 On Heightened Economic Risk, 13 October, 2011, Standard and Poors, www.standardandpoors.com
(4) Sovereigns Ratings List, Standard and Poors, www.standardandpoors.com
(5) U.S. Money Funds Reduced Lending to French Banks by 44% in September, By Radi Khasawneh - Oct 13, 2011 5:01 PM MT, Bloomberg News, http://www.bloomberg.com/news/2011-1...ast-month.html
(6) Governments and banks locked in fatal embrace, October 11, 2011, by John Plender, Financial Times, www.ft.com
(7) Credit Trends: Downgrades Outpaced Upgrades in The Third Quarter in the US., Europe, Emerging Markets, and The Other Developed Regions, 13 October, 2011, Standard and Poors, www.standardandpoors.com
(8) Mearsheimer, John J., The Tragedy of Great Power Politics, 2001, W.W. Nortin Inc, New York, New York
(9) Europe Crisis Plan Wins Global Backing, By Simon Kennedy and Cheyenne Hopkins - Oct 15, 2011 4:00 PM MT, Bloomberg News, http://www.bloomberg.com/news/2011-1...23-summit.html
(10) Why Europe’s officials lose sight of the big picture, by Wolfgang Munchau, October 16, 2011, Financial Times, www.ft.com
(11) Global Financial Stability Report, Grappling with Crisis Legacies, September 21, 2011, International Monetary Fund, http://www.imf.org/External/Pubs/FT/...1/02/index.htm
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