RBS has its critics, but the bank is absolutely right not to prop up Peacocks

When you shout about dressing people for £3 you surely ought to find a ready market

Outlook It is always when you're down that people line up to give you a kicking. Royal Bank of Scotland (RBS) has been down for a very long time and so it's taking brickbats from all quarters. Start with the shares, which have halved in value over the past year, leaving its biggest shareholder (us, thanks to the Government bailout) facing a paper loss in the billions.

Then there are the unions, who are outraged over the jobs cuts that seem to come on a monthly basis. Just last week 5,000 were announced at its investment bank.

Then there are the multi-million pound bonuses that the people presiding over the carnage are set to pocket. They make everyone cross.

If that wasn't enough, RBS is now being cast as the villain of the piece in what could end up being the biggest retail blow up since Woolies unravelled, pictured. There are 10,000 or so jobs at risk at Peacocks, the discount clothes retailer which stopped preening some time ago.

On the face of it, Peacocks' troubles could be seen as something of a surprise. When you shout about dressing people for £3 you surely ought to find a ready market, if not much margin. The consumer squeeze should be the delight of a discounter like that, shouldn't it?

Apparently not. The trouble for Peacocks is that it has some savvy and aggressive rivals to deal with. Did someone say Primark (although its profits are down too)? Not to mention the supermarkets.

And these days when it comes to discounting it doesn't matter what sector of the market you're in. Everybody's at it. Faced with pay cuts, if not threats to their jobs, consumers just aren't biting like they used to. Even those that are might just be buying one £3 ladies stretch cami top this year instead of the two or three they might have stashed away before. But Peacocks can't just blame the "challenging" market everyone's talking about. Its problems are just as much about debt, and the decisions by management that have loaded it down with too much.

What money it is making isn't enough to meet the interest on that, let alone pay it back.

One way out of this conundrum could be for Peacocks' lenders to swap that debt for equity. Other banks appear to be willing.

RBS not so much, and perhaps we should be thankful. This is a bank that spent years throwing good money after bad. Taxpayers have been left to pick up the pieces. Cold comfort for those retail workers facing an uncertain future, but with schools and hospitals getting squeezed, now is not the time for the Government to be using our money to prop up more failing businesses, either directly or by proxy through RBS.

There is a lot that RBS can be criticised for, deserves to be criticised for. Those unconscionable bonuses to start with. But the people who should carry the can for several thousand looming retail redundancies (it is possible that at least some of the jobs could be saved) at Peacocks are its management, not the management of its most high-profile refusenik bank.

Moody's leaves the French without tears

Has an entente cordiale broken out between Moody's and the French?

The "other" credit ratings agency yesterday affirmed France's much-debated rating at AAA – that should be Aaa in Moody's speak. It is lumbered with a rather less user-friendly classification system that rarely gets quoted. Its creation was not Moody's cleverest decision.

What might prove to be very clever in terms of winning friends is that Moody's has taken a rather more liberal stance towards troubled big hitters like the US and France than has its biggest rival. Perhaps there'll be fine French wine to go with the American burger and chips in the Moody's canteen this afternoon.

Au contraire, will be the Moody's response. Actually, it will probably be something stronger, and accompanied by an angry letter extolling the virtues of its brilliant researchers, furiously defending their (and its) integrity and expressing a deep malheur at the very suggestion.

Moody's simply wouldn't dream of keeping a credit rating on hold just because the country concerned was a big noise in global circles and might get cross. So there.

In reality, does it really matter whether one agency says France is Aaa while another says AA+ and a third, perhaps, says doubleplusgood? The market will take its own view. In the case of France, if yesterday's bond auction is anything to go by, it is relatively sanguine, although President Nicolas Sarkozy's debt people did have to pay a small premium when compared to the last auction before the S&P downgrade.

The gloss fell off the ratings agencies some time ago, largely in the wake of the performance of certain mortgage-backed securities that were rated investment grade but, as history has shown, made Greece's bonds look like German bunds.

People like pension trustees and one or two others who ought to have known better learned a painful lesson during the credit crunch: when you invest it's caveat emptor. So do your own research and make your decision based on that rather than what a ratings agency says.

That message appears to have got through, and as a result today's sovereign ratings seem to be more about prestige than anything resembling logic, at least at the top end (and maybe elsewhere too).

Hence the fuss kicked up by the Americans and the French when they got downgraded. Having S&P tell them what everybody else already knew generated a few headlines and bruised their politicians egos. But that was about it. And at least they have Moody's to cuddle.