Degradation of long-term credit rating on Morgan Stanley manifests the slow but steadily continuing financial meltdown
Marla Guthrie
Jun. 28, 2008

According to Moody's Senior Vice President Peter Nerby, ‘Markets have clearly been challenging, but Morgan Stanley has also incurred some expensive trading mishaps during the past year.’

Moody's Investors Service is considering cutting its long-term credit rating on Morgan Stanley, calling the investment bank's financial performance and risk management since the onset of the mortgage crisis "inconsistent."

The move signifies the problem areas in the financial sector. The investment bankers are bleeding and the financial meltdown continues.

According to recent data from investment banking firms and the financial services sectors, the bad debt related wrong decisions are still mostly uncovered. Add to that the inability of the debtors in serving the loans due to $143 crude oil price, there is the recipe for a fast financial meltdown.

The stock market is signaling major troubles in the financial sectors. The biggest problem is that Federal Reserve did what it could to save the market from Bear Stern’s meltdown. But it seems they may not be able to stage a similar magic if another ‘Bear Sterns’ happen. According to some financial think tanks, there are plenty of Bear’s in the Wall Street. The next catastrophic collapse will come from unjustified leveraged M&A activities. Federal reserve will not have the capacity to support such a run without plummeting dollar by printing cash without any limits.

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Marla Guthrie
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