Europe stuns with €1.5 trillion bank rescue, as France plays role of saviour

Germany, France, Italy, Spain, Holland and Austria have joined forces to launch the greatest bank bail-out in history, offering over €1.5 trillion in guarantees and fresh capital in a “shock and awe” blitz to halt the credit panic.


French President Nicolas Sarkozy Photo: PHILIPPE WOJAZER

The move – unveiled simultaneously in the six states to maximise the show of unity – throws the full weight of the eurozone behind global efforts to stem the crisis.

The move gave a tremendous boost to bourses across Europe, lifting the Euro Stoxx index by 9.53pc in the biggest one-day rally ever.

The pan-European plan – totalling over $2 trillion, or £1.17 trillion – completes the third leg of a dramatic restructuring of finance across the Western world. Sovereign states have now absorbed the brunt of the credit risk in half the global economy.

Read moreEurope stuns with €1.5 trillion bank rescue, as France plays role of saviour

EU Nations Commit 1.3 Trillion Euros to Bank Bailouts

Oct. 13 (Bloomberg) — France, Germany, Spain, the Netherlands and Austria committed 1.3 trillion euros ($1.8 trillion) to guarantee bank loans and take stakes in lenders, racing to prevent the collapse of the financial system.

The announcements came as Britain took majority stakes today in Royal Bank of Scotland Group Plc and HBOS Plc. The coordinated steps followed a pledge yesterday by European leaders to bolster market confidence as the global economy slides toward recession.

“What it should do is stabilize the banking system,” said Peter Hahn, a fellow at London’s Cass Business School and former managing director at Citigroup Inc. “Will it stop us from having a recession? No, nothing is going to stop us from having a recession.”

Read moreEU Nations Commit 1.3 Trillion Euros to Bank Bailouts

EU and US block IAEA Israel resolution

The International Atomic Energy Agency conference of 145 nations criticizes Israel for refusing to put its atomic program under monitoring.

Israel is known to have nuclear arms, but has a “no tell” policy on the issue.

However, Israel managed to evade a vote to link it to nuclear proliferation in the Middle East.

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World economic crisis: France moves into recession

The French premier, Francois Fillon, today warned that the world was “on the edge of the abyss” as his country moved into an official recession.

Fillon’s comments, blaming an “irresponsible” financial system, came as the Dutch government seized control of bancassurer Fortis’s Netherlands operations in a €16.8bn (£13.06bn) deal greed with the Belgian and Luxembourg authorities.

The effective nationalisation, forced upon the governments by the scale of the financial meltdown, includes Fortis’s interests in Dutch bank ABN Amro.

The shock decision came just days after the three governments injected €11.2bn into Fortis, Belgium’s biggest bank, to keep it afloat.

Read moreWorld economic crisis: France moves into recession

ECB Keeps Rate at 4.25% Even as Recession Looms

Oct. 2 (Bloomberg) — The European Central Bank kept interest rates at a seven-year high today to curb inflation, even after the credit crunch forced governments to bail out banks and increased the likelihood of a recession.

ECB policy makers meeting in Frankfurt left the benchmark lending rate at 4.25 percent, as predicted by all 58 economists in a Bloomberg News survey. The bank will cut borrowing costs in February next year, another survey shows.

The financial crisis reached new heights in Europe this week as governments stepped in to help rescue five banks and credit costs soared to records. With the euro-region economy on the brink of a recession and retreating oil prices pushing down inflation, the ECB may have more room to lower rates.

Read moreECB Keeps Rate at 4.25% Even as Recession Looms

EU to introduce ‘virtual strip searches’ at airports by 2010

Digital body scanners which leave little to the imagination will be used by airport security on passengers travelling across the European Union within two years.


The new imaging technology creates an image of an unclothed body which privacy critics argue ‘amounts to a virtual strip search’ Photo: PA

According to a draft European Commission regulation, seen by The Daily Telegraph, the new millimetre wave imaging scanners are to be used “individually or in combination, as a primary or secondary means and under defined conditions” to provide a “virtual strip search” of travellers.

The new EU regulation, which will be binding on Britain, is intended to enter into force across the continent by the end of April 2010.

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Der Spiegel: DID SAAKASHVILI LIE?

Part1: The West Begins to Doubt Georgian Leader

Five weeks after the war in the Caucasus the mood is shifting against Georgian President Saakashvili. Some Western intelligence reports have undermined Tbilisi’s version of events, and there are now calls on both sides of the Atlantic for an independent investigation.

AP
Georgia’s President Mikhail Saakashvili visits Gori last week.

Read moreDer Spiegel: DID SAAKASHVILI LIE?

Ex-Minister: Saakashvili Planned South Ossetia Invasion

PARIS (Reuters) – Georgian President Mikheil Saakashvili had long planned a military strike to seize back the breakaway region of South Ossetia but executed it poorly, making it easy for Russia to retaliate, Saakashvili’s former defence minister said.

Irakly Okruashvili, Georgia’s leading political exile, said in a weekend interview in Paris that the United States was partly to blame for the war, having failed to check the ambitions of what he called a man with democratic failings.

Saakashvili’s days as president were now numbered, he said.

Read moreEx-Minister: Saakashvili Planned South Ossetia Invasion

Bailouts Will Push US into Depression


Source: YouTube

The end result of the global economic slowdown may be the U.S. announcing national bankruptcy as the government cannot afford the bailouts that it promised and the market will not bail out the government, Martin Hennecke, senior manager of private clients at Tyche, told CNBC on Thursday.

“We expect a depression in the United States. We expect a depression, very possibly, also in Europe,” Hennecke said on “Worldwide Exchange.”

The estimated $300 billion cost of the Fannie/Freddie bailout will probably be considered as a loss that the government will have to take, therefore passing it on to taxpayers, he explained.

“We already have $3 trillion of debt, as far as the U.S. government is concerned. These debt figures across the U.S. economy are rising very sharply.”

When the government can no longer pass the United States’ “immense debt” on to taxpayers, it will turn to the holders of U.S. dollars, leading to the eventual downfall of the currency, Hennecke said.

“Definitely, it (the dollar) is not a safe place to be invested in, as real inflation is closer to 10 or 11 percent than the actual inflation numbers given by the U.S. government,” Hennecke said on “Worldwide Exchange”.

Investors should avoid exposure to debt and stay away from leveraging on any investment or asset, including property, Hennecke advised, adding that “banks have been too highly leveraged in the past, private households, everybody.”

Hennecke’s stock allocations are mainly Asian-based, especially in the Chinese market as the country’s government has a large amount of cash and the macroeconomics are fundamentally strong.

He also suggested investing in gold, despite the recent fall in price.

11 Sep 2008

Source: CNBC

Recession forecast for Germany, Spain and UK

Germany, the UK and Spain all face recessions this year, the European Commission forecast yesterday, dashing finally any remaining hopes that Europe would avoid a sharp economic downturn. France and Italy would fare little better, it said.

The steep downward revisions in growth forecasts by the European Union’s executive arm showed it had accepted that tumbling business and consumer confidence was hitting economic activity – even though the European economy had been “generally sound” prior to the credit crisis .

Joaquin Almunia, economics and monetary affairs commissioner, described the environment as “difficult and uncertain”. As well as financial turmoil and a near doubling of oil prices over the past year, significant housing market corrections in some countries were taking their toll, he said.

Read moreRecession forecast for Germany, Spain and UK