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An outbreak of damp-eyed optimism on Tuesday by those who think that the world’s got a little over-wrought in the financial flip-flopping of recent weeks.

The banks have come in for a particularly hefty dose of soothing words - with a detailed Merrill report just the first to land informing us that banking armageddon is not upon us.

Dresdner are also on board. “Although at some point last week it seemed like all banks were going to disappear from the surface of the earth, the sector is only down by a modest 1.6 per cent absolute in these last two weeks,” the report by Arturo De Frias says, reiterating the bank’s decision to upgrade the sector last week. The market is discounting too extreme a scenario for the banks - buy the banks, says DK, just avoid the investment banks.

Less comforting perhaps given their role in recent events is the material flowing forth from the ratings agencies.

Moody’s, in a slight tweaking of their argument last month, claims that fears of a systemic crisis in banking remain overblown but adds, ” the ’system’ may need to be assisted more than we initially expected.”

They think that “peace-keeping operations” by the central banks may become an enduring feature of the system as concerns about where risk has accumulated leaving it vulnerable to failures of confidence. Moody’s adds:

It is ironic that, after a three- to four-year period of deliberations about the excess liquidity in the world economy, the financial system now appears to be threatened by an absence of liquidity. This simply confirms that liquidity is one of the least well-understood concepts of modern finance.

S&P also wants everyone to calm down. In their effort on Tuesday, they report that credit quality overall for Europe’s top issuers of corporate debt has not deteriorated since their last look, despite the volatility.

On the banks, S&P adds:

The European and global economic outlook remains sound, and corporate and emerging market credit quality remains supportive. We believe that European banks overall should be well positioned to absorb the impact of such market risk charges. Moreover, following years of profitable growth, improving efficiency, and successful diversification, the resilience of the European banking sector is generally strong enough in our opinion to weather the current environment.

Everyone has spoken. Stop worrying.

We still want to know which one it was that has tapped the BoE emergency lending facility though.