We've spoken before about the European financial crisis. Things are going downhill rapidly there. Today Moody's, one of the Big Three credit rating agencies, "cut the debt ratings of six European countries including Italy, Spain and Portugal, and revised its outlook on the U.K.’s and France’s top Aaa ratings to 'negative', citing Europe’s debt crisis". Moody's is the third and last of the Big Three to cut European credit ratings. Standard & Poor's and Fitch, the other two, did so last month.
To give you an idea of how bad things are getting over there, last week the Telegraph reported that GlaxoSmithKline (ranked 194th in the Fortune Global 500 last year), is adopting new measures to protect its funds.
GlaxoSmithKline is clearing cash out of eurozone countries on a daily basis to protect itself against a potential banking and liquidity crisis in the region.
Sir Andrew Witty, chief executive of Britain's biggest drug maker, said that early last year the company had started emptying "tens of millions of pounds" in cash every day out of most eurozone countries into accounts in Britain.
"We don't leave any cash in most European countries. We sweep any cash we raise during the day out of local banks into banks we think are robust and secure," he added. "You do your best to actively manage the risk."
Drug makers have been hurt by price cuts in the eurozone as cash-strapped governments curb their drug bills, as well as failures by countries to pay their debts.
But Sir Andrew said that Glaxo had been reducing its risk over the past two years through "a huge focus on getting paid" by the hospitals it sells to in Southern Europe and it had been able to reduce its debts in the region.
There's more at the link.
I'm sure GlaxoSmithKline is unlikely to be the only major multinational company seeking to protect its funds in this way. Even so, when the world's third-largest pharmaceutical company finds it necessary to take such drastic steps, you can draw your own conclusions. I think Europe's right on the brink. Sooner rather than later, something nasty is going to happen; and when it does, the ripples will spread across the Atlantic Ocean with blinding speed and rock America as well.