Bailout Panic Hits Europe

Slate ^ | October 6, 2008 | Bernhard Warner and Matthew Yeomans

[Lorianne]

European governments were reeling this morning from the shocking news that Germany had orchestrated a $68 billion emergency intervention to save Hypo Real Estate, one of the country's biggest banks, reports the BBC. In the process, German Chancellor Angela Merkel seemingly offered a "blanket guarantee," in the words of the Guardian, on all German personal savings—currently worth some $700 billion. (Has that number got a familiar ring to it?) The move left British treasury officials "furious," coming just hours after Germany had pledged to join a coordinated but imprecisely articulated European response to the fast-developing banking crisis. Merkel's somewhat vague attempt to "reassure German savers all their deposits would be safe," has caused confusion across Europe and "buried any remaining semblance of a unified European response by guaranteeing individuals’ deposits in an effort to avert a crisis of confidence in the nation’s banks," writes the London Times.

[Lorianne]

Lots of embedded links to other sources within the article. Recommend reading the originals.

[Tzimisce]

The European socialists were looking down on the poor stupid Americans and our captalist system a couple of weeks ago....

[ikka]

Each country now has to ensure THEIR banks, otherwise people will withdraw funds from that country’s banks and put them in German or Irish banks.

[Red Boots]

bump for later.

[ken21]

a laugh, isn’t it?

[Wiseghy]

The cascade continues. AIG and CDS’s are a worldwide issue.

I suspect the market fall today was related to the international lack of leadership in every western political system to deal swiftly with this problem.

More blood tomorrow, I’ll bet.

[sourcery]

More blood tomorrow, I’ll bet.

Probably not so much tomorrow. But Thursday is another matter. That's when they have the auction to determine the market value of the debt swaps sold by AIG. The one for WaMu is later this month, and could be every bit as momentous.

[VOA]

The European socialists were looking down on the poor stupid Americans
and our captalist system a couple of weeks ago....

And apparently invested heavily in Fannie Mae and Freddie Mac
stock!!!
(And trusted AIG to insure their bets)

I guess they FOOLISHLY believed all the ROT the US Government
and their functionaries (Franklin Raines, Barney Frank, Thomas Dodd,
etc.) pushed about how bullet-proof an investment in those GSEs were.

I'm not laughing at the Europeans/Asians/etc. that followed that
investment strategy.
The economic devastation wrought by the criminal action of some
government and private-enterprise gurus is likely to be widespread,
prolonged and PAINFUL.

Because (although you probably won't hear it in the real MSM)...
plenty of small local banks followed the same advice and were
even allowed to use those GSE investments, just like Treasury bills
to calculate their capitalization.
Because Fannie Mae and Freddie Mac were "secure".
Once those went south, the capitalization of some small banks evapororated...
forcing them to sell out to larger banks.
One small bank in Johnson City, TN was thus profiled in the Wall
Street Journal about a week ago.

In fact the WSJ even noted late last week that an agency called
"Farmer Mac" (honest, you can't make this up), like the small banks
had to recapitalize when their safe Fannie/Freddie stock went "poof".