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| Europe |
| Euro Reaches 13-Month Low |
| 2008-10-06 |
| Oct. 6 (Bloomberg) -- The euro slid to a 13-month low against the dollar as European governments rushed to support financial institutions in the region hit by the widening global credit crisis. The 15-nation currency also fell to the lowest in more than two years versus the yen as German Chancellor Angela Merkel said the government will guarantee personal bank deposits to shore up confidence in the banking system. Germany, the euro region's largest economy, will also join with banks and insurers to bail- out property lender Hypo Real Estate Holding AG, while Belgium announced a deal to rescue Fortis, the largest Belgian financial-services firm after an earlier rescue failed. ``Everything coming out has been fairly euro-negative,'' said Alex Sinton, a senior currency dealer at ANZ National Bank Ltd. in Auckland. ``The euro zone is the second domino of the globe to be falling over after the U.S.'' The euro declined to $1.3670 at 8:15 a.m. in Tokyo from $1.3772 late in New York on Oct. 3. It earlier reached 1.3617, the lowest since Sept. 5, 2007. The euro fell to 142.65 yen, the weakest since May 22, 2006, and traded at 143.29 yen from 145.11 yen. The dollar bought 104.88 yen from 105.32 yen. The German government and the country's banks and insurers agreed on a 50 billion euro ($68 billion) rescue package for commercial property lender Hypo Real Estate Holding AG after an earlier bailout faltered. BNP Paribas SA, France's biggest bank, will take control of Fortis's units in Belgium after a government rescue of the Brussels and Amsterdam-based company failed. BNP Paribas will buy 75 percent of Fortis Bank Belgium from the government for 8.25 billion euros ($11.3 billion) in stock, and purchase the company's Belgian insurance operations, Prime Minister Yves Leterme told reporters. Japan's currency was the best-performer in September and the only currency to appreciate against the dollar as credit market collapse that drove Lehman Brothers Holdings Inc. into bankruptcy and sent bank borrowing costs in Europe to record highs makes the yen unbeatable. Deutsche Bank AG, the biggest trader of foreign exchange, says the yen will rise 5 percent in coming months. New York- based Morgan Stanley is telling clients to buy the currency versus the euro and pound. Futures traders increased their bets that the yen will gain against the U.S. dollar, figures from the Washington-based Commodity Futures Trading Commission show. |
| Posted by:Steve White |
| #13 Nope, Chemist. You're dead on. The European banks are in serious trouble for two reasons. First, they skirted around their regulatory capital requirements, primarily through arrangements insured by AIG. Second, the European Central Bank *raised* interest rates as liquidity began seriously drying up. Perverse ideologically-rigid stupidity on their part. So when the sub-prime mortgages started having trouble, the European house of banking cards was much more rickety than that of the US and Canada. |
| Posted by: lotp 2008-10-06 21:49 |
| #12 Firstly let me say I know nothing about economics or finance...but I keep hearing people say that the problems in Europe are due to the 'trouble the Americans got us all into'. Isn't our (I'm Canadian so by 'our' I mean Canada's) economy more entwined with the US than most others? If the American financial crisis is the cause of Europe's banks failing then why are the Canadian banks doing OK? As far as I know we have had none of them fail. Am I off the ball here? |
| Posted by: Chemist 2008-10-06 21:44 |
| #11 NS wins the Silver Lining award of the day. ;-) |
| Posted by: lotp 2008-10-06 13:18 |
| #10 For years the market tracked surprisingly closely with the Euro to Yen value. When the Euro strengthened against the Yen, the market went up and vv. Luckily for us, the market has divorced itself from that trend. |
| Posted by: Mike N. 2008-10-06 11:39 |
| #9 At least we won't have to worry about cutting defence to the point where they are defenceless. |
| Posted by: Nimble Spemble 2008-10-06 11:37 |
| #8 I wonder, if Europe plunges into a deep recession, if they can keep their socialist lifestyle? Or their quite generous welfare programs for immigrants. |
| Posted by: lotp 2008-10-06 11:05 |
| #7 And if not, how bad would the riots and civil unrest be? If France was a precursor, I'd dump any stock dealing in auto insurance. |
| Posted by: Procopius2k 2008-10-06 10:21 |
| #6 The US Fed has been injecting $ into Euro banks. Also I read somewhere that most of the $85B US Treasury loan to AIG went to pay off European companies. |
| Posted by: ed 2008-10-06 10:19 |
| #5 Euro banks are much more highly leveraged than US. |
| Posted by: Nimble Spemble 2008-10-06 09:52 |
| #4 I wonder, if Europe plunges into a deep recession, if they can keep their socialist lifestyle? And if not, how bad would the riots and civil unrest be? Maybe some of our European 'burgers could expand on these ideas. |
| Posted by: DarthVader 2008-10-06 09:42 |
| #3 "The euro zone is the second domino of the globe to be falling over after the U.S." The US stumbled. The Euros are falling. As Richard Fernandez reminds us of Samuel Johnson's quote "the prospect of hanging focuses the mind wonderfully" this morning, the markets are becoming focused upon security rather speculation. The underlying fundamentals become important in determining where to harbor your resources. |
| Posted by: Procopius2k 2008-10-06 08:03 |
| #2 OOOPSIES, forgot THE NEXT ECONOMIC DOMINO TO FALL IS EUROPE; + THE BAILOUT CRSIS: THE END OF DEMOCRACY [in Amerika]. |
| Posted by: JosephMendiola 2008-10-06 00:16 |
| #1 ION BRITAIN: CASH-STRAPPED NAVY TO CUT HALF OF DESTROYER FLEET; + TERROR THREAT [incl. Al Qaeda]TO UK APPROACHING CRITICAL ["severe end of severe"]; + Over 75,000 BRITS MAY DIE FROM FLU OUTBREAK. Compare last wid CHINA > MILLIONS TO DIE FROM LUNG DISEASE. |
| Posted by: JosephMendiola 2008-10-06 00:13 |