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| European banks have turned out to be deeper in debt than their US counterparts. |
| 2008-10-02 |
| Financial Crisis: So much for tirades against American greed Ambrose Evans-Pritchard says it is ironic that European banks have turned out to be deeper in debt than their US counterparts. It took a weekend to shatter the complacency of German finance minister Peer SteinbrÃŒck. Last Thursday he told us that the financial crisis was an "American problem", the fruit of Anglo-Saxon greed and inept regulation that would cost the United States its "superpower status". Pleas from US Treasury Secretary Hank Paulson for a joint US-European rescue plan to halt the downward spiral were rebuffed as unnecessary. By Monday, Mr SteinbrÃŒck was having to orchestrate Germany's biggest bank bail-out, putting together a €35 billion loan package to save Hypo Real Estate. By then Europe was "staring into the abyss," he admitted. Belgium faced worse. It had to nationalise Fortis (with Dutch help), a 300-year-old bastion of Flemish finance, followed a day later by a bail-out for Dexia (with French help). Within hours they were all trumped by Dublin. The Irish government issued a blanket guarantee of the deposits and debts of its six largest lenders in the most radical bank bail-out since the Scandinavian rescues in the early 1990s. Then France upped the ante with a €300 billion pan-European lifeboat for the banks. The drama has exposed Europe's dark secret for all to see. EU banks took on even more debt leverage than their US counterparts, despite the tirades against ''le capitalisme sauvage'' of the Anglo-Saxons. We now know that it was French finance minister Christine Lagarde who begged Mr Paulson to save the US insurer AIG last week. AIG had written $300 billion in credit protection for European banks, admitting that it was for "regulatory capital relief rather than risk mitigation". In other words, it was underpinning a disguised extension of credit leverage. Its collapse would have set off a lending crunch across Europe as banking capital sank below water level. It turns out that European regulators have allowed even greater use of "off-books" chicanery than the Americans. Mr Paulson may have saved Europe. |
| Posted by:3dc |
| #6 Some Netters are accusing the US of engaging in BANKING/FINANCIAL TERRORISM AND IMPERIALISM, and also FOOD TERORISM-IMPERIALISM vee CHINA'S MELAMINE CRISIS??? World-conquering OWG USSA, versus Weak Anti-sovereign OWG Global SSR/United Socialist Republiks of Amerika Rising!? D *** NG IT. BOYZ, MCDONALDS IS CHANGING THEIR DOLLAR DISCOUNT PRICE-MENU - THE STAATBUREAU WANTS TO BECOM THE GLOBAL BUREAU. WITFH IS GOING ON AROUND HERE [humor]!? |
| Posted by: JosephMendiola 2008-10-02 21:43 |
| #5 In their unending need to prove they are better than us, they have proved they can make bad housing loans at a level Americans can't hope to match. Congrats, you really ARE better at something. |
| Posted by: no mo uro 2008-10-02 20:22 |
| #4 Remind me again of why these people are our friends. |
| Posted by: Richard of Oregon 2008-10-02 14:46 |
| #3 Yep. Watch HGTV House Hunters International and you see prices in the outlands in Europe, not the major metro areas, going for the same high price per square foot for something just as small in the middle of New York or SanFran. Knowing that they have even less disposable income than we do, it never seemed to make sense. |
| Posted by: Procopius2k 2008-10-02 12:31 |
| #2 The headline is not unexpected - European homes are far more inflated price-wise - absolutely and related to income - than American ones. In fact, the US housing bubble (3x historical valuations relative to income) was rationalized by comparing it to European valuations. |
| Posted by: Zhang Fei 2008-10-02 11:06 |
| #1 So do we counter-gloat now, or should we just leave it alone? |
| Posted by: Jonathan 2008-10-02 09:53 |