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Moody’s Corporation(NYSE:MCO) has cut the ratings of eleven European banks as the world looks on toward a Greek election this weekend. Moody’s said that a Greek exit from the Eurozone would trigger further downgrades.

The banks downgraded by Moody’s today included five Dutch banks, three French banks and one each from Luxembourg and Belgium. The move follows the recent downgrades of banks from Spain, Germany and Austria in the wake of Spain’s banking problems and growing European worries.

The list of downgraded banks are; Rabobank Nederland, ING Groep N.V. (NYSE:ING), ABN AMRO Group N.V., LeasePlan Corporation N.V., Banqu Federative Du Credit Mutuel, Group BPC, Group CIC, KBC and Banque et Caisse Du Epargne De l’Etat.

There is clearly an escalation in the scale of the European debt and financial crises, at least from Moody’s point of view. The length of time between smaller incidents has become shorter, with Greece’s possible exit just weeks removed from Spain’s near collapse, and the problem is beginning to affect all of Europe more heavily.

For Moody’s that means a swing in the crisis does not just precipitate a downgrade in its particular location but one right across the Eurozone. We’re finally seeing the crisis take its full toll on countries like Germany, and Austria that up until now seem to have their business in order and under control.

Moody’s is with this move predicting the volatility and unpredictability of the days following a Greek exit from the Eurozone. Though it seems almost everyone has a plan in place to deal with that eventuality, the markets are not as confident in the plans of Central banks as they might be if the crisis hadn’t been allowed get this far.

That market instability means money is currently flowing into dollar assets and especially into Treasury Bills. Traders are hesitant to invest in Europe, especially the periphery.

Moody’s may seek to downgrade the European banks further in some weeks if the Greeks do hold true and leave the European single currency. That means little rest for the markets even as the summer. A full break up of the Eurozone will be constantly talked about if the Greek rumours come to fruition.