Financials' Tears Flow from Japan

A bloodstained financial sector plodded into the afternoon, leaking money after a panicky global selloff found U.S. victims. The Philadelphia Stock Exchange/KBW Bank Index was recently off 5.4%. It was hit after Fitch, an international credit rating agency, put 19 Japanese banks on its Rating Watch Negative list, fearing that falling stock prices and loan problems could affect credit quality.

Rating Watch Negative is not a good sign. It's like someone's looking into your personal credit rating to see if you're at risk to be a deadbeat. No one would look unless they had some reason to.

Now, most of those 19 banks, which include Fuji Bank and Sanwa Bank, do not trade in the U.S., but that doesn't mean their problems can't spread into the U.S. economy. Japanese-American market relations are quite close, especially in the crowded tech field. And Japan has never truly recovered from its devastating crash in the 1989 to 1990 period, with the Nikkei 225 recently hitting 16-year lows. That turned the clock back to when Pee Wee Herman's Big Adventure hit the big screen . There's nothing funny about that horrific hemorrhage of money, which calls into question the quality of many lending institutions. ...