The following commentary comes from an independent investor or market observer as part of TheStreet's guest contributor program, which is separate from the company's news coverage.NEW YORK ( ETF Expert) -- LIBOR (London Inter-Bank Offered Rate) is the interest rate that fellow European banks will charge other banks. Put another way, it is the rate at which a financial institution in the region can borrow money. In order for banks to operate, they are consistently lending out and/or borrowing. If they cannot exchange with one another, required reserve levels could be deemed "inadequate" or investors could sour on the health of the company. A bank that cannot get access to funds from any source could find itself being taken over by a respective government, perhaps to prevent widespread withdrawals that might cripple the entity. Why am I bringing up LIBOR trends today when S&P downgraded the sovereign debt of France? For one thing, inspite of the market's gloom-n-doom reaction, the event is not a surprise. The agency gave a 45-day warning on
Of course, if the six-day move of falling rates becomes a longer term trend, one may be able to set aside worries about the extension of credit coming to a standstill. Moreover, the shares of corporations in the financial sector around the world could see relief rallies. I am not declaring myself bullish on financial companies. I still believe it is sensible to underweight developed world banks. That said, should the European credit crunch ease, I would be more eager to acquire Asian ETFs that have large financial weightings. For the last six months, terrific economies with exceptionally solid financial institutions have been held hostage... deemed guilty by association. Indeed, if the credit crunch in Europe continues easing, I'd have a lot more interest in Asia country funds like iShares MSCI Singapore ( EWS) and iShares MSCI Malaysia ( EWM).