The surprising finding to me in all of this credit crisis mess has been that Europe was, if anything, slightly more relaxed in their regulatory approach than the US, and their financial institutions even more leveraged.
[quote]Carsten Brzenski, chief economist at ING in Brussels, said the global crisis was now engulfing Europe with devastating speed.
"We are at imminent risk of a credit crunch. Key markets are not functioning properly. The Europeans thought the sub-prime crisis was just American rubbish that the US should clean up itself, but now they are finding out that it is their rubbish too," he said.
Data from the IMF shows that European banks hold 75pc as much exposure to toxic US housing debt as US banks themselves. Moreover they have mounting bad debts from the British, Spanish, French, Dutch, Scandinavian, and East European housing markets, where property bubbles reached even more extreme levels that in the US.[/quote]
The big news tonight is that Germany had to effect an emergency bailout of one of its larger institutions this weekend AND announce that they were going to guarantee all individual German bank deposits.
These are enormous moves and prove that Europe is in no better condition than the US. It makes me wonder if part of the move down in the Euro isn’t a discounting of the possibility that the Euro might break apart under all this strain.
[quote]LONDON (MarketWatch) — Germany became the latest, and by far the biggest, European country to explicitly guarantee the deposits in banks held by their citizens, in a move announced Sunday.
The guarantee of private deposits came just hours before German officials set up a 50 billion euro ($68 billion) bailout of troubled commercial property lender Hypo Real Estate aimed at avoiding broader damage to Europe’s largest economy.
German Chancellor Angela Merkel said she could not allow problems surrounding Hypo to affect the broader system.
Ireland and Greece moved to back bank deposits last week, and the cap on insured deposits in the UK is being raised to 50,000 pounds ($88,400) from 35,000 pounds. [/quote]
Right now the US futures market are down a bit more than 1.5%, indicating that the US stock market could continue its post-bailout sell-off on the open tomorrow.
by lemonyellowschwin