Posted on 10/15/2009 5:55:11 PM PDT by blam
German 'Wise Men' Fear Credit Crunch In 2010
Germany's leading institutes have warned that the pace of economic recovery is "unsustainable" and that the country's banks may face a fresh crisis over the next year as bad debts surface in earnest.
By Ambrose Evans-Pritchard, International Business Editor
Published: 7:31PM BST 15 Oct 2009
The Wise Men said Germany's economy would contract by 5pc this year
'There is still a significant risk of further shocks to the international financial system,' said a joint report by the five 'Wise Men', a panel that advises the government.
Emergency action by the European Central Bank and authorities worldwide "averted a looming collapse" of Germany's banks over the Winter but lenders are still too frail to renew normal lending.
German credit crunch deepens"Credit to non-financial firms has clearly been declining. Financial conditions are likely to worsen further. Banks are facing large write-offs on toxic debt and a rising toll of company insolvencies," it said.
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(Excerpt) Read more at telegraph.co.uk ...
The British people are living in a fool's paradise and have yet to understand the gravity of the economic crisis, according a former head of the Financial Services Authority.
By Ambrose Evans-Pritchard, International Business Editor
Published: 9:24PM BST 15 Oct 2009
Sir Howard Davies, now Director of the London School of Economics, said Britain faces a dangerous rise in the levels of public debt – even taking into account tax increases planned for coming years.
"The next six months are going to be extremely delicate in the UK", he told a gathering of HSBC clients in London. "It is very clear that something dramatic has to happen to control spending: but is the economy robust enough to survive fiscal tightening?"
The Government is already running out of weapons to fight the crisis. While the fall in the pound has helped boost exports and proved benign so far, Sir Howard said that past experience handling sterling crises had taught him that the matters can turn ugly fast once confidence is lost. "The pound never stops where you want it to," he said.
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bttt
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