October 2nd, 2008
London Calling: Credit crisis
may tear European Union apart
London this decade was as big a purveyor of complex debt instruments as New York, and the big Euro banks participated in a big way.
The EU was also even more lax than US re allowing banks to hold potential future liabilities incarnated in swap agreements off their balance sheets.
Thus today, as those obligations have been triggered and are being called, the Euro banks are apparently even worse off (re debt-to-capital ratios) than ours — leading the Daily Telegraph (London) to worry aloud that the lack of a central authority with both power and resources to stabilize the Euro banks may pull the Union itself apart.
ed says:
And now, across the weekend, it appears that Europe’s attempt to rescue the huge german bank Hypo ($550 billion in assets — compared to $660 billion at bankrupt Lehman) — has failed.
The consequences of Lehman’s fall were catastrophic — provoking in good part Hypo’s pending failure.
Which in turn will provoke more.
October 5th, 2008 at 12:11 pm
ed says:
Sunday night and Germany announces a deposit guarantee program something like Ireland’s — while the world waits to see if Hypo Bank goes under.
Here’s an overview of Europe’s bank woes at always excellent Naked Capitalism.
October 5th, 2008 at 9:01 pm
ed says:
Sunday. So, Germany — government and fellow banks — kick in $68 billion to keep Hypo Bank’s doors open.
But … The European stock markets sell off Monday horrendously — down roughly 7% across the board.
October 5th, 2008 at 10:31 pm
ed says:
And the American markets follow Europe off the cliff.
October 6th, 2008 at 2:33 pm
ed says:
The Crack that may fracture the EU perhaps has come:
Iceland is nationalizing its banks — and asking Moscow (not London) for money.
October 8th, 2008 at 4:00 pm
ed says:
The Iceland-Britain situation is approaching warlike, with Britain now freezing Icelandic assets within its reach.
See the link to Iceland in prior comment here.
October 19th, 2008 at 9:08 pm
ed says:
Here is a comment on how lax — the the point of empty — the British securities laws were/are. And how this made the impact of Lehman’s bankruptcy all the more horrendous over there.
October 19th, 2008 at 9:09 pm
Conversation » After the Rescue: “Worldwide Wreckage” says:
[...] Europe’s traumatic weekend (see comments here), European stock markets fell roughly 7% [...]
October 9th, 2010 at 12:24 am