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Are banks in Europe starting to fall down now as well?

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posted on Oct, 5 2008 @ 10:45 AM
Now that last week the Dutch-Belgium-Luxembourg bank Fortis has been nationalized to prefend from falling down, now another Belgium-France bank DEXIA is in trouble because it is linked to a German Bank Hypo Real Estate which is almost bankrupted and will loose billions of Euros. Governments are trying to come up with a solution before tomorrow morning as the stock markets are opening. DEXIA will be probable also nationalized as well as Hypo Real Estate.

So it's obvious Europe is getting hit as well. How is this possible and how will this go on, does governments have enough money to protect all banks that will fall?

edit: links

Fortis nationalized

Bank of Scotland next in line

German Government leads Hypo Real Estate rescue talks

&dist=msr_1]Icelan d in talks on rescue plan for troubled banks

[edit on 5/10/2008 by rai76]

posted on Oct, 5 2008 @ 10:53 AM
yeah it's all tied together.

same corrupt central bank owners, even with the govt bailing out and taking an interest it wont solve anything.

And that dutch minister of finances lied his *** off with that reversed bankrobbery, he even said there will be profits within a year.

It's the beginning of the end, there isn't much gold left if any at the ECB vaults...

posted on Oct, 5 2008 @ 11:05 AM

Originally posted by rai76

Are banks in Europe starting to fall down now as well?

"Starting"? Northern Rock was taken over by the government in February this year after needing serious Bank of England support last Autumn.

This has been happening for a while in Britain.

posted on Oct, 5 2008 @ 11:09 AM
It's not just the US

Remember the phrase? " International Bankers "

It's a GIANT **** sandwhich and we are all going to take a bite!

posted on Oct, 5 2008 @ 11:41 AM
reply to post by rai76

Well, our Federal Reserve got the ball rolling by lowering the interest rates down to 1% in 2002, then ECB followed us off the cliff by lowering their rates to 2% in 2003. So yeah, expect that defaults on mortgages and therefore other derivative type of instruments based on debt to create havoc in Europe. Europe is not immune to this mess.

Also according to this article by the St. Louis Fed back in 2006, "there is a higher percentage of adjustable rate mortgages in the Euro Area."

If Europe has higher percentage of adjustable rate mortgages, then expect to have bigger problems over there...

[edit on 5-10-2008 by Gateway]

posted on Oct, 5 2008 @ 12:27 PM
I posted this in another thread, which is my take on things:

This problem began and is firmly rooted in the USA. We do not have the same problems here, rather our systems have been infected by Toxic US investments which have fallen in value. Granted, our boys in the City got greedy too, but the origin of this mess is America.

The bankers lent people money who, if we're brutally honest shouldn't have been, on the basis that the property market would continue to rise indefinately.

100/110/120 % mortages, 5-7 times someones salary, whichever way you cut it, the lending was out of control.

Once the property prices hit a critical point, people stopped buying them, the prices began to fall, interests rates went up and people could no longer afford those huge homes with the huge mortages attached.

Suddenly, the banks were left holding unpaid mortgages on homes that are worth considerably less than what they were bought for. The defaults caused further problems in the system, which further restricted available credit and liquidity, magnifying the problem further.

All this accumulated and cascaded through the system until we're talking astronomical amounts of money that was lent on assets only worth 1/2 (or worse) of what they were bought for.

This is where you get the banks collapsing. With the collapse of one Bank, other institutions that were otherwise solid, suddenly looked shaky as they had lent the bust Banks money and now wouldn't be paid back. Onwards and upwards this went through the system.

This is how the mess got transferred from the USA to the rest of the world. Our housing market is not collapsing, but prices have fallen due to a drop in demand caused directly by the difficulty in getting a mortgage, as no one is lending now like they used to, because those very banks have been exposed to the US sub-prime mess, not because the banks or EU economies are inherantly unsound, but because of investments bought in America.

In mainland Europe, home ownerhsip as a percentage of the population is FAR lower when compared to the US or UK. Many actually rent and those that actually do buy are faced with tougher lending criteria.

For example, in France you have always needed a 20% deposit, minimum. On top of that, they'll not lend you anywhere near the multiple of your salary that you can get in the US or UK, so exposure by EU banks to the housing bubble is limited.

Most of the EU banks are in trouble either because they invested in US real estate (specifically sub-prime lending) or have been caught out by the liquidity problem caused by the sub-prime lending going to pot.

Fundamentally, the EU isn't in bad shape economically. We're certainly better positioned than the US, but our financial system has been infected by the toxic situation unfolding in America.

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