Submitted by Tyler Durden on 05/26/2012 10:50 -0400
ETC
European Central Bank
Loan-To-Deposit Ratio
Norway
Rating Agencies
Rating Agency
ratings
Sovereign Debt
There are those who claim that rating agencies are utterly irrelevant, incompetent, behind the curve and merely echo chambers of popular opinion. They are 100% right. There is, however, one critical function that rating agencies execute - they put into words what everyone else knows is fact, but are simply unwilling to recognize due to the systemic implications of admitting yet another lie: subprime, failed banks, Europe, etc. By the time a rating agency has finally opined on something in a way indicative of the truth, it is too late to stick one's head in the sand. Yesterday precisely this happened once more - from the WSJ: "Credit rating agency Moody's Investor Service Friday downgraded a range of major banks in Sweden and Norway, citing contagion risks from the European debt crisis. But observers said the cuts were less sweeping than feared and reflect the strength of Nordic banks versus their European peers, which risk sharper downgrades as Moody's continues a Europe-wide review that started earlier this month with cuts to 26 Italian lenders. In February Moody's placed various ratings of 114 financial institutions in 16 European countries on review for possible downgrades, highlighting the banks' vulnerability to the euro zone sovereign debt crisis. "We read this as a sign of the strength in relative terms of Swedish banks which are coping well," Swedish Central Bank Deputy Governor Per Jansson said. Moody's Friday downgraded the ratings for Sweden's Nordea Bank AB (NDA.SK) and Handelsbanken AB (SHB-B.SK) by one notch to Aa3, and for specialist agricultural lender Landshypotek AB by two notches to Baa2." Furthermore, as Zero Hedge reminded two days ago, when it comes to deposit backing, European banks are so levered from a loan-to-deposit ratio, that even the tiniest risk of deposit flight would result in immediate undecapitalization, and further outflows. Oddly, nowehere is this more evident than in various Scandivanian banks such as Danska, Handelsbanken (SHB), Swedbank, and Nordea, two of which were just downgraded by Moody's.
Visually this can be seen here.
http://www.zerohedge.com/news/postcards-sweden?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+zerohedge%2Ffeed+%28zero+hedge+-+on+a+long+enough+timeline%2C+the+survival+rate+for+everyone+drops+to+zero%29
Realist - Everybody in America is soft, and hates conflict. The cure for this, both in politics and social life, is the same -- hardihood. Give them raw truth.
| 