Belle of Liberty

Letting Freedom Ring

Friday, October 07, 2011

Bad Report for UK Banks

It’s about 11:30 Eastern Daylight Time in New York, and apparently the New York Stock Market just read the bad news from England, which broke about 90 minutes ago:  (the market nosedived over 150 points) from SkyNews:

“Moody's cut its rating on state-owned banks RBS by two notches and Lloyds TSB by one notch, taking both to Aa3.  Other institutions to be downgraded included the UK arm of Spain's Santander, Co-Operative bank, Nationwide building society and several smaller UK banks.

“Sky's City editor Mark Kleinman had revealed in May that Moody's would be putting 14 British banks and building societies on review for a downgrade.  In a statement, the ratings agency said the downgrades were caused by a reduction in confidence after the Government withdrew its backing for seven smaller institutions and scaled back its support for the five ‘larger, more systemically important financial institutions.’

“It added that medium- to long-term support was unpredictable but that it expects the Government to continue to support the bigger banks which are more systemically linked.

"’However, it is more likely now to allow smaller institutions to fail if they become financially troubled,’ it warned.

“Although it recognised that the stand-alone financial strength of the five institutions had improved, it did not offset the reduction in the Government's safety net.  Shares in the banks slumped as markets opened this morning, with any initial gains expected in the FTSE quickly wiped out.  RBS shares fell 5% when markets opened this morning but recovered as the day wore on.  The bank said it was disappointed that Moody's had not ‘acknowledged the progress we have made in strengthening the bank's credit profile.’

“’We do, however, see the removal of implicit Government support for the UK banking sector as being a necessary and important step forward as the sector returns to standalone strength," it added.

“Moody's said that the downgrades do not reflect a deterioration in the financial strength of the banking system or that of the UK Government.  Commenting on the news, Chancellor George Osborne said: ‘As I understand it, one of the reasons they are doing this, is because they think the British Government is actually moving in the direction of trying to get away from guaranteeing all the largest banks in Britain.

“‘I'm confident that British banks are well capitalised, they are liquid, they are not experiencing the kinds of problems that some of the banks in the Eurozone are experiencing at the moment.’

“The regional building societies affected by the ratings review were Newcastle, Norwich & Peterborough, Nottingham, Principality, Skipton, West Bromwich and Yorkshire.  The ratings agency also downgraded nine Portuguese banks.”

As soon as the word gets down to the Occupy Wall Street Crowd, they’ll be breaking out the champagne – or the cheap beer.  Considering the age and mentality of this crowd, their lack of knowledge, imagination, and maturity, they should break out the grape juice.

If their college tuitions are too high, they can thank the college professors who are mentoring them in this street action.  Better yet, they could go back home to their communities and attend community college until they can afford to a school where professors teach history not political organizing.  Are the students wearing the clown masks political science majors or theatre majors?

Just what kind of career they’re being prepared for is unclear.  But if this is our future government sector, you can imagine what it will be like standing on the DMV line.  If they wind up as civil service employees at the DMV, we will have revenge and it will be sweet.


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