*****European Banks Desperate To Avoid Recognizing Losses On Their 8 Trillion Us Holding*****

www.marketskeptics.com ^ | March 14, 2009 | Eric deCarbonnei

[givemELL]

Summary of key points:

European banks own 8 trillion US assets (treasuries, agencies, consumer loans, etc…) and they are losing access to their dollar funding. If European banks are forced to sell their US assets, it will crash the credit markets, and they will have to recognize enormous losses. Since the fed is desperate to prevent the collapse of the US financial system, it lent those European banks 600 billion dollars so that they wouldn’t be forced to sell. Meanwhile, European banks accepted this 600 billion because they don’t want to recognize losses on their toxic US securities.

What is going to happen? Well in my last entry, I highlighted how:

“When the American economy fell into depression, US banks recalled their loans, causing the German banking system to collapse”

The same thing will happen in 2009, except the roles will be reversed. As Europe falls into a depression, European banks will recalled their loans and sell off dollar assets, causing the US banking system to collapse. Once this foreign liquidation and deleveraging of US assets begins, the current need for dollar financing will be replaced by desperate panic to escape America’s collapsing currency. Finally, like with US banks back in the 1930s, European banks will have to recognize enormous losses on their foreign holdings, making many of them insolvent.

[givemELL]

This is a new site to me, with many focussed pieces on current economic issues with new analysis and viewpoint and coverage...latest article on home page is relevant also:

http://www.marketskeptics.com/2009/03/bad-news-hidden-in-uss-trade-data.html

The disscussion and the stunning graph showing decline of US trade in Jan 09 are important.

[lafroste]

The link provided doesn’t work.

[Nahanni]

Try http://www.marketskeptics.com/2009/03/european-banks-desperate-to-avoid.html for the article he posted.

[givemELL]

This corrected link should work....

http://www.marketskeptics.com/2009/03/european-banks-desperate-to-avoid.html

[An Old Man]

Try this one

[stockpirate]

ping

The basards that passed and signed CTR have destroyed our nation.

There should be tried in the courts.

CRA was passed by a REPUBLICAN controlled congress and signed by Clinton.

[blam]

Didn’t Obama and Larry Sanders just say on TV , ‘just kidding’ evertything is okay?

[muawiyah]

They're trying to cover up the fact that a worldwide drought is underway, and that serious famine is sure to follow.

They don't want you to know that because you might want them to do something to prepare for it rather than hold barbeques in the Rose Garden.

Sad to say, these people aren't any smarter than Herbert Hoover when faced with a similar situation.

Now, concerning European holdings of American assets, that's a lot of money. At the same time with millions of people starving to death around the world, America will look pretty good to them.

[3niner]

CRA was passed by a REPUBLICAN controlled congress and signed by Clinton.

Wrong, the CRA was passed in 1977. Both houses of Congress were controlled by strong Democrat majorities, and the legislation was signed by Carter.

[Syncro]

CRA and CTR...what do they stand for?

Thanks