Credit ratings agency drops SocGen and Credit Agricole to Aa2

While the move isn’t entirely unexpected, this is a major wobbling domino on the way to euroimplosion. The immediate result will be yet more dead money piling up at the European Central Bank (ECB) – as opposed to invested in the economy and/or lent to other banks wanting to lend. Moody’s focused on the banks’ exposure to the Greek economy, although the recent market sell-off reflects a broader concern over the health of other southern European countries such as Italy, as well as over the political will in Italy and elsewhere to sustain the euro.

At the same time, BNP Paribas was kept on review for a possible downgrade. Commentators see SocGen as the main potential problem, given its deep involvement in a Greek subsidiary. It’ll certainly give German Chancellor Angela Merkel and French President Nicolas Sarkozy something to talk about when they meet today. They were due to hold talks yesterday, but Sarkozy had to cancel…probably because he was told about the Moody’s cut, but definitely because he was asked for a decision about State guarantees for the three majors. No doubt he’ll share this with his best friend Mrs Grump when they meet. Expect prolonged outbreak of platitudes later.

Talk about dominoes, by the way, isn’t sensationalism for the sake of it: The Slog’s new eminence doesn’t mean it’s about to turn into the Soaraway Slog. This is still the home of common sense – and there is a trail beginning to appear through the jungle this crisis has become. It looks like this:

Faith lost in Greece…..Domino 1 falling

Faith lost in eurobank(s)…..Domino 2, wobbling

Faith lost in another EU member….Domino 3 Italy wobbling violently, Domino 4 France quaking a little

Bernanke reveals he has no new ideas…..Domino 5 Fed Reserve disappoints markets

French major calls for emergency Elysees help….Domino 4 wobbles and quakes

Investment money exits eurozone, led by US….Domino 6 – ClubMeds, three fall over at once

Domino 7 ESFS loses credibility….Domino 8 Euro price collapses

The order of these dominoes may go up or down according to events. Dominoes 9 and 10 have yet to be named. Stay tuned.