Robert Mcdowell

European Bank Downgrades To Accelerate - S&P

The S&P downgrades of banks' credit ratings - of those that benefit from government guarantees and shareholdings is very dubious and counter-intuitive. The basis of doing so too, based on latest GDP recession estimates, is unsafe given that these figures are advisory or temporary, and will be severely revised for up to the following 2 years e.g. just like when the US data was revised to show recession began in Dec.07 not mid-08, just as UK is likely to revise its recession start back to beginning July 08, while Euro zone figures are likely to be revised upwards to show recession starting not back end of last year but end of this year, 2009, or even mid-2010? UK banks' default rates are much lower than in the USA despite the UK banks' US exposures. S&P is downgrading banks to the point where they lose their unsecured borrowing grades and that is unrealistic while at the same time undoing all attempts to get interbank lending flowing more freely at lower spreads.