Europe is facing a dire situation that now gets quite complicated by the action where Standard and Poor's stripped France and Austria of their AAA credit rating while Malta, Slovenia & Slovakia also suffered a one-notch downgrade and Italy and Spain fell by two notches (to BBB+ and A respectively).   France’s downgrade was widely expected and in principle should already be factored in by forward-looking bond markets.  Yet so fragile is confidence in markets for euro-zone bonds that investors are unlikely to greet the ratings downgrade with a Gallic shrug.  In the case of France, it is not only a blow to the country's prestige.  It also tears a hole in the already threadbare euro-zone safety net, the European Financial Stabilization Mechanism.

French downgrade also downgrades Nicolas Sarkozy’s re-election chances Paris, Jan.21.─ ... thanks to President Nicolas Sarkozy, France’s AAA rating became a national symbol last year. Every voter knew it was bad news when Standard & Poor’s (S&P), a ratings agency, downgraded France from AAA to AA+ on January 13th. S&P blamed the euro-zone crisis and France’s high debt. It also stripped Austria of its AAA rating and downgraded seven other countries. But Germany kept its top rating, despite being on credit watch. Had Germany also been downgraded, Mr Sarkozy’s failings might have come under less intensive scrutiny.

It was Mr Sarkozy himself who reportedly said last year that, if France lost its AAA, “I am dead”. François Baroin, finance minister, added that France could preserve its social model only if it kept the top rating. A poll this week for Europe 1, a radio station, found 68% of the French cared about the rating and thought its loss would have grave consequences. The main worry is that France’s cost of borrowing will rise—though so far rates have been steady.

François Hollande, the Socialist presidential candidate, tried to capitalise on the news. His poll lead over Mr Sarkozy has narrowed: 28% of voters now plan to vote for him in the first round, against 26% for Mr Sarkozy, though he still has a clear lead for the second, decisive round, says one recent poll. “It is not France which has been downgraded, but a government and a president,” Mr Hollande declared. Two other presidential candidates, the National Front’s Marine Le Pen and the centrist François Bayrou, also hope to benefit from voters’ disillusion after the downgrade ...

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The Huffington Post reported recently Bloomberg’s most comprehensive version to date of its data on Federal Reserve emergency lending. The Fed made some 50,000 transactions for a total of $1.2 trillion in loans to banks and financial institutions.  But Bloomberg did not have it easy.  In order to find out which institutions got loans under two of the seven lending programs, it was forced to file Freedom of Information Act requests. The Fed did not disclose the data until Bloomberg LP filed suit against the Fed, and the suit almost made it to the Supreme Court!  The Clearing House Association, representing some of the biggest commercial banks in the U.S., argued that making public the information would undermine investor confidence in the banks and warned that these banks would now be less likely to try to get emergency assistance in the event of a future crisis.  But Dean Baker, co-director of the Center for Economic and Policy Research, was adamant: “This is public money,” he said. “The public has every reason in the world to know where it went.  The fact that these institutions benefited enormously… you can really dispute,” Baker added.  In fact, according to an earlier Bloomberg report, even after paying off interest, these banks made around $13 million as a result of receiving Fed loans.

Bloomberg releases most Detailed Description yet of Federal Reserve Emergency Loans

Washington, D.C., Dec.23.─ Add up the emergency loans the Federal Reserve distributed to banks between 2007 and 2009 -- when the American economy lurched closer to collapse than anyone had previously thought possible -- and it's an impressive picture.

On Friday, Bloomberg News made available the fullest version yet of its data on Fed emergency lending, a subject the news organization has written about numerous times in the past year. The Bloomberg release includes records of about 50,000 transactions the Fed made through seven different financial mechanisms.