US elections voting guide/assist... - Page 9

Lt. Killer M · 11-11-2008, 20:02

socralynnek,

I never said that the private sector wasn't at fault, and didn't get it. but it was the Landesbanken that consistently did the most stupid deals. Theoretically, they should be better equipped than e.g. the Hyporealestate, which specialized in loans, as they should have sufficient cover for their loan and speculation business. MY bank has, and has no losses so far, either. But the Landesbanken ran risks unnecessarily, stupidly, and thus lost where there was no need at all.

Whomp · 12-11-2008, 00:30

It seems to me that some European countries are in for some even more difficult times than the US. Banks and industry have much closer ties than they do in the US and lack of credit will not help matters. European banks have already written off over $300 billion of US subprime and they way I see it there's more to come from a couple other areas.

First, you have the broad credit contraction. Easy credit allowed new member countries (poor and rich alike) to flood their economies with cheap funds due to the Euro. Maybe easy for the Dutch and German economies to manage but Spain and Czech Republic?

Second is a subprime problem developing quickly in countries like Spain (some people got 110% loans and 70% of bank holdings is in RE?) and Ireland, Portugal and Italy. Once again easy credit sending prices beyond even what people in the US could only fathom. Spain built more homes than UK, Germany and France at the top of the market in 2006. Not pretty...

Third, the investment in the Balkan/Baltic countries by European banks. Foreign ownership of financial institutions in places like Czech Republic 97%, Slovakia 96%, Croatia 90%, Bosnia 83% exploded over the last 5 years probably only surpassed by UAE and Qatar. That credit has now collapsed.

My question is can there be a concerted effort to address these problems or will each country be on their own to raise capital? Easy for say Germany, UK (and Holland I think) who rejected a overall bailout plan asked for by big deficit spenders Italy and France.

socralynnek · 12-11-2008, 09:21

If it didn't affect me, it would be quite funny to watch...It's maybe the first big task since the Euro kicked in and the Euro countries are that much dependent on each other.

Countries like Spain or Ireland were the ones that had the biggest boost with the Euro, so it's kind of normal if they now get the biggest hit. Spain ahs a housing crisis but AFAICS it's as much limited to houses itself as can be (sure it affects the whole system, but not like the housing crisis in US, as Spanish banks were pretty much restricted on gambling)

The problem is: The Euro zone had as a common interest only: limited inflation and free markets.
Because of inflation the European central bank raised the interest rate this summer despite the recession being possible/likely, which was a real mistake IMO.

There are already programs (since years) for regions where the economy is low to push hem, but I guess in the next few mohs those will be too little. Otherwise it looks like each country wants to do their own thing (that is: our rather stupid chancellor wants to do that and so no coordinated program can be set)
OTOH, the economies are tied but there is not "one economy" so it might as well be that every country has its own needs.

Funny thing: I guess, European banks might be even more hurt by US credit crisis as probably they are the ones who bought these packages. Some banks, even the Landesbanken mentioned by Killer, had some child firms in some other country where the rules were less tight so they could do their risky business there...

Whomp · 13-11-2008, 00:31

Though Spain may not have the problem in aggregate as the US housing it is a much larger percentage of GDP. I think it's 10% vs. 5% in the US. The other problem with Spain that seems to be an issue is wages being tied to inflation doesn't allow for a lot of flexibility when unemployment is running around 10%. I'm not sure what the foreclosure rate is right now in Spain but in the US it's running around 6% of total mortgages but the silver lining is 30% of homes here are paid off.

Extraorinary times we are living in and 2009 should be no exception.

11-11-2008, 20:02	#81
Lt. Killer M Emperor Join Date: Mar 2003 Location: HAWK!. Posts: 4,365	socralynnek, I never said that the private sector wasn't at fault, and didn't get it. but it was the Landesbanken that consistently did the most stupid deals. Theoretically, they should be better equipped than e.g. the Hyporealestate, which specialized in loans, as they should have sufficient cover for their loan and speculation business. MY bank has, and has no losses so far, either. But the Landesbanken ran risks unnecessarily, stupidly, and thus lost where there was no need at all. __________________ One more turn..... just one more turn... one MORE!

12-11-2008, 00:30	#82
Whomp King Join Date: Mar 2005 Location: Chicago. Posts: 2,388	It seems to me that some European countries are in for some even more difficult times than the US. Banks and industry have much closer ties than they do in the US and lack of credit will not help matters. European banks have already written off over $300 billion of US subprime and they way I see it there's more to come from a couple other areas. First, you have the broad credit contraction. Easy credit allowed new member countries (poor and rich alike) to flood their economies with cheap funds due to the Euro. Maybe easy for the Dutch and German economies to manage but Spain and Czech Republic? Second is a subprime problem developing quickly in countries like Spain (some people got 110% loans and 70% of bank holdings is in RE?) and Ireland, Portugal and Italy. Once again easy credit sending prices beyond even what people in the US could only fathom. Spain built more homes than UK, Germany and France at the top of the market in 2006. Not pretty... Third, the investment in the Balkan/Baltic countries by European banks. Foreign ownership of financial institutions in places like Czech Republic 97%, Slovakia 96%, Croatia 90%, Bosnia 83% exploded over the last 5 years probably only surpassed by UAE and Qatar. That credit has now collapsed. My question is can there be a concerted effort to address these problems or will each country be on their own to raise capital? Easy for say Germany, UK (and Holland I think) who rejected a overall bailout plan asked for by big deficit spenders Italy and France. __________________ If at first you don't succeed, try, try again. Then quit. There's no point in being a damn fool about it.--W. C. Fields

12-11-2008, 09:21	#83
socralynnek Moderator Join Date: Nov 2004 Location: USS Defiant Posts: 3,827	If it didn't affect me, it would be quite funny to watch...It's maybe the first big task since the Euro kicked in and the Euro countries are that much dependent on each other. Countries like Spain or Ireland were the ones that had the biggest boost with the Euro, so it's kind of normal if they now get the biggest hit. Spain ahs a housing crisis but AFAICS it's as much limited to houses itself as can be (sure it affects the whole system, but not like the housing crisis in US, as Spanish banks were pretty much restricted on gambling) The problem is: The Euro zone had as a common interest only: limited inflation and free markets. Because of inflation the European central bank raised the interest rate this summer despite the recession being possible/likely, which was a real mistake IMO. There are already programs (since years) for regions where the economy is low to push hem, but I guess in the next few mohs those will be too little. Otherwise it looks like each country wants to do their own thing (that is: our rather stupid chancellor wants to do that and so no coordinated program can be set) OTOH, the economies are tied but there is not "one economy" so it might as well be that every country has its own needs. Funny thing: I guess, European banks might be even more hurt by US credit crisis as probably they are the ones who bought these packages. Some banks, even the Landesbanken mentioned by Killer, had some child firms in some other country where the rules were less tight so they could do their risky business there... __________________ Being without a signature since November 2004.

13-11-2008, 00:31	#84
Whomp King Join Date: Mar 2005 Location: Chicago. Posts: 2,388	Though Spain may not have the problem in aggregate as the US housing it is a much larger percentage of GDP. I think it's 10% vs. 5% in the US. The other problem with Spain that seems to be an issue is wages being tied to inflation doesn't allow for a lot of flexibility when unemployment is running around 10%. I'm not sure what the foreclosure rate is right now in Spain but in the US it's running around 6% of total mortgages but the silver lining is 30% of homes here are paid off. Extraorinary times we are living in and 2009 should be no exception. __________________ If at first you don't succeed, try, try again. Then quit. There's no point in being a damn fool about it.--W. C. Fields