Once again, we find what seems to be a morehonest appraisal of the potential impact of this crisis from foreign
sources; this time from Germany.
Germany is in shock as subprime gets worse
17 April 2008
Germany is mired so deep in the subprime crisis that its entire banking
structure is under threat of collapse. As write downs continue to mount
and government guarantees wear thin, experts warn that losses could
soon reach €30bn (£24bn) – and possibly more.
It is the long-suffering German taxpayer who will be handed the
final bill, just at a time when German industry and employment as a
whole is on the up.
‘The subprime meltdown has caused the deepest financial crisis in
Germany in decades,’ wrote the influential news magazine Der Spiegel
this week.
To a people with memories of another crash, that of 1929, helping
to propel the Nazis to power and Germany to ruin, the spectre of a
replay of those dark times is grim indeed. Throughout the crisis, banks
and politicians have sought to downplay the scope of the losses, but
the risks continued to mount.
Meanwhile, Der Spiegel was pretty blunt in their assessment of our activities over here in the US…
The Madness of Ben Bernanke
The dollar is in a tailspin, the trade deficit is
growing and a recession is on the horizon. The American way of life is
in serious danger. But the head of the Federal Reserve keeps on pumping
easy credit into the system — a crazy policy that will worsen the
crisis.
The credit-financed consumer boom of recent years is coming to a
painful end. Today’s American Way of Life has no chance of surviving
the coming years undamaged. The virus will continue to ravage its way
through the financial system.
The property crisis is likely to spread to credit card providers
soon and will then probably infect car manufacturers, furniture makers
and all the other firms that owe their sales increases to the growth in
credit finance. "The virus will keep on infecting the system," one
management board member from a large bank said, requesting anonymity in
return for the candour of his analysis.
