Sunday, October 05, 2008

Across the pond and around the globe...

Financial institutions continue to list and take on water...

And the leaders of the EU have ruled out a Eurobank rescue pool. But I'm sure you'll be happy to know they're all going to have a "global economic summit to examine whether overhauls are needed for the existing World War II-era international financial system."

French President Nicolas Sarkozy, Prime Ministers Gordon Brown of Britain and Silvio Berlusconi of Italy and German Chancellor Angela Merkel convened Saturday at an emergency meeting in Paris to discuss a concerted European response to the Wall Street financial crisis that has lead to a string of bank nationalizations in the U.S. and Europe.

Sarkozy, who has emerged as Europe's most vocal advocate of a continent-wide response, told reporters that for now, Europe's four leading economic powers have agreed to continue to address bank failures one case at a time. He said each country would use "its own means" to safeguard banks from collapse, but would do so "in a coordinated way." Merkel and Brown were particularly opposed to creating a Europe-wide pool for failing banks, the newspaper said.

Oktoberfest surprise. Are you surprised that banks would be sitting on their hands when it comes time to help out? Looks to me like they were waiting for the government to come through. Guess what? It looks like they still are. Major German Bank and 2nd biggest mortgage lender close to Collapse.

A spokesman for Hypo Real Estate said a consortium of banks refused to provide the $50 billion required by a government-sponsored rescue plan, the BBC reported. Analysts said they believe Hypo is within a few days of failure. Government officials and banking representatives were expected to meet Sunday to discuss alternatives. Hypo Real Estate has been hit hard by bad debt and the credit squeeze.

The Dutch Government is trying to put a finger in their leaky economic dyke, that of "embattled bank" Fortis by temporarily nationalizing it because its financial situation was more dire than expected.

The government's move came only days after the governments of the Netherlands, Belgium and Luxembourg announced a partial takeover of the Dutch lender. But Dutch banking officials said Friday Fortis needed more help, and so purchased its core assets for $55 billion, the British newspaper The Independent reported. Dutch officials said they made the moves to protect the country's assets and it was necessary to ensure "the continued proper functioning of vital financial functions for the Dutch economy," the newspaper reported.

Iceland's economic iceberg is leaving it looking like the Titanic.

Iceland has been hit hard by the credit crisis, with the government taking control of the country's third largest bank this week. The country's currency has been sliding, The Guardian reported. The kronur dropped 14 percent during the week and is now worth less than a cent. Gylfi Magnusson, a University of Iceland economist, said that the entire banking system is at risk. Because the three major banks, Kaupthing, Landsbanki and Glitnir, have assets about nine times the country's gross domestic product, the country "doesn't have the money to keep the banks afloat," he added. "This past week has been about as bad as it could get," he said. "People are very worried and have no real idea what the future might look like." Iceland, with a population of about 300,000, has been one of the fastest-growing European economies in recent years. But the growth has been built on easy credit, and its banks are now having trouble obtaining short-term loans.

Inky dinky parlay vous. It's now official. France slips into the stormy seas of a recession and the French socialists can barely contain their glee.