Weaker investor confidence over global growth has resulted in a hasty retreat from risky sset classes in recent weeks.

Banks are currently preparing for Basel III's higher capital requirements. Speculation about the impact these changes could have are widespread throughout the markets. Given the implications of the Basel III agreements it is imperative to understand the strengths and weaknesses of the new standards.

Increasingly it looks like developed western nations are following the path set by Japan. Overburdened by debt, growth remains low, deflation rather than inflation becomes the major pre-occupation for central bankers and interest rates remain low.

As Greek default widens to Spanish and Italian contagion, many investors are wondering what will happen now for European Union sovereign debt. A key question is whether the issue can be kicked further down the road.

On both sides of the Atlantic politicians are locked in crucial talks about how to address their respective debt positions that are an increasing threat to the global economic outlook. The stakes are high in both continents but whereas in the US there is a relatively simple decision to make (the two leading political parties need to agree to raise the government debt ceiling before the country technically defaults on 02 August), in Europe the situation is more complicated.

Amid all the discussion about the role of credit ratings in financial markets, their actual performance has often been misunderstood. Ratings are forward looking opinions of relative creditworthiness, so their performance can be measured by how well correlated they are over time with defaults and by the rate at which they change.