Yesterday the Bank Of England's Mervyn King painted a gloomy picture of the UK economy and its future prospects. He said that it had sunk to the depths of the last great depression of the nineteen-thirties.
Maybe his words and the Bank of England's reaction and action yesterday has played a part in today's downgrade. Certainlt the government's stance on bank bail-outs will not have helped.
According to Moody's the UK Coalition government however has recently " withdrawn its backing for seven smaller institutions and scaled back its support for the five "larger, more systemically important financial institutions.""
Moody's does seem to still believe that the UK government would help out the larger banks but just not the smaller ones. However some of these smaller ones hold the investments, savings and mortgages of many UK householders. One of those downgraded, The Nationwide, has consistently performed well. It is one that many UK bank users, including myself, rely on. This downgrading should not affect Nationwide's trading but it might. Some people will soon run scared and move their financial portfolio elsewhere.
The Banks downgraded today include, regional Building Societies Newcastle, Norwich & Peterborough, Nottingham, Principality, Skipton, West Bromwich and Yorkshire; the UK arm of Spain's Santander, Co-Operative bank, Nationwide building society and several smaller UK banks; plus state-owned banks RBS Lloyds TSB. RBS faired worse than Lloyds TSB which they are not happy about.
Moody's also downgraded some Portuguese banks.
Opinion: When people such as those involved in Occupy Wall Street protest movement complain about corporate greed and the like, this is the sort of thing they mean. At one fell swoop such downgradings can affect a person's life savings and future. The "money men and women" will of course know exactly how and where to protect their wealth.
The Great Depression spiralled out of control rapidly when certain investors decided to pull the plug. Almost 80 years on little has changed, as far as the markets go, especially for the better.
Stock markets around the world reacted true to form and share values plunged again this morning.