Economic ripples in a pond?

[DarkHalo]

I heard some talking heads describing expected 'ripples' in europe from the sub prime meltdown here. While the 'pebble in a pond' analogy is somewhat apt it is more like dropping a Buick from a cliff into a small pond.

IHT/Reuters - Germany Guarantees Bank Deposits

As German leaders and bankers worked feverishly to rescue a lender considered too big to fail, the government announced Sunday that it would guarantee all private savings accounts in Germany - worth about €500 billion - in an effort to reinforce increasingly shaky confidence in the financial system.

Officials in Berlin were frantically trying to salvage a €35 billion, or $48 billion, bailout devised just a week ago for Hypo Real Estate, a major German property lender based in Munich and member of the benchmark stock index, after commercial banks withdrew their support, fearing greater losses.

The Belgian authorities, meanwhile, were looking for ways to secure the future of Fortis operations in Belgium, after its Dutch operations had been nationalized by the Netherlands on  Friday.

In Iceland, where the government seized control of a bank last week, officials were considering more sweeping measures to stabilize finances there as well.

However radical, the German move stops short of what Ireland did with its banks last week. The Irish government backstopped savings accounts as well as other liabilities of six domestic banks, a step that effectively lent a sovereign guarantee to creditors of the banks and ensured their solvency.

And the board of UniCredit, which is based in Milan and also operates in Germany and much of Eastern Europe, met to consider a capital increase after being buffeted by a week of speculation about its solvency. A nightmare outcome for Europe would be the failure of a major, border-straddling bank like Unicredit.

Ive always heard that when America gets a cold the rest of the world gets pneumonia. We need some very public hangings for the investors and politicians that caused this.

[Miss Mia]

DarkHalo I read an interesting article in the WSJ Thursday on this.  (it maybe out of date by this point though)

EU Is Divided on Crisis Measures
German Minister Rejects French Plan Mirroring That of U.S.; U.K. on Own Track

By MARCUS WALKER and JOELLEN PERRY in Berlin and DAVID GAUTHIER-VILLARS in Paris

Germany dismissed France's call for a Europe-wide response to the financial crisis while Ireland's new broad-based bank guarantees drew criticism from other European officials, putting the European Union increasingly at odds with itself as its governments struggle to ensure the soundness of their banking system.

n an interview with The Wall Street Journal, German finance minister Peer Steinbrück said the crisis was U.S.-centered and suggested European governments are overreacting if they pursue coordinated plans for bank bailouts. "To put it mildly, Germany is highly cautious about such grand designs for Europe," he said. "Other countries are free to think about it. I just don't see any German interest in it."

German officials are opposed to any European plan that would mirror the U.S.'s proposed $700 billion purchase of banks' bad assets. Mr. Steinbrück questioned why German taxpayers should have to pay "to stabilize situations for which other countries are responsible." Berlin also isn't interested in a Europe-wide financial regulator, though it supports a package of EU-wide banking regulations proposed Wednesday.

The position of Germany, Europe's largest economy, could cloud a Paris summit on the financial crisis on Saturday, organized by French President Nicolas Sarkozy. Mr. Sarkozy has said he is concerned that the EU, with its individual national financial regulations, is ill-equipped to cope with the potential failure of a major multinational bank.

French Finance Minister Christine Lagarde, in an interview with German newspaper Handelsblatt, due for publication Thursday, describes an EU fund to bail out banks when an individual country can't cope. A spokesman for Ms. Lagarde said it was "an idea worth debating, not a proposal."

-snip-

[bijou]

That's the line the Labour Prime Minister here has been trying to spin. However he is trying to deflect attention from the fact that (as Chancellor before becoming PM) he ran an economy based on nothing more than the house price bubble.  Massive public expenditure alongside a 'feeling' of prosperity for many by the ever increasing price of real estate. There were many people making the same mistakes independently too.

[Miss Mia]

Germany clinches bank rescue deal
The German government and banks have agreed a 50bn euro ($70bn; £40bn) plan to save one of the country's biggest banks, the finance ministry says.

The news comes after Chancellor Angela Merkel said she would do all she could to save faltering Hypo Real Estate.

The government and the banks have found an extra 15bn euros after the collapse of a previous rescue plan.

Meanwhile, French giant BNP Paribas has confirmed reports it is to take over parts of the troubled Fortis bank.

Belgian Prime Minister Yves Leterme says the governments of Belgium and Luxembourg will in turn take a blocking minority share in BNP Paribas, according to the AP news agency.

"No client or depositor [at Fortis] will end up in problems due to the financial crisis," said Mr Leterme.

The Iceland government is also working overnight to try to shore up its entire banking system.

-snip-

[DumbAss Tanker]

Someone up on European financial issues please fill me in here.  Were these Eurobanks dumb enough to actually invest in our worthless no-doc-mortgage-based securities, or do they indulge in equally idiotic practices in their own countries that are crashing due to the sudden worldwide realization that the entire scam was ridiculous from the git-go?

[DarkHalo]

Someone up on European financial issues please fill me in here.  Were these Eurobanks dumb enough to actually invest in our worthless no-doc-mortgage-based securities, or do they indulge in equally idiotic practices in their own countries that are crashing due to the sudden worldwide realization that the entire scam was ridiculous from the git-go?

Their  so called money market experts are just as stupid and greedy as our own. So yeah, they too assumed property values would increase 10-20% every year forever. Dumb shits.