Infinite Unknown

The French state has threatened to seize control of the country’s banks and fire top staff unless they do their part to stabilise the economy by stepping up lending to companies in need.

“The banks have got to open up credit to business: they have the means to do it,” said prime minister Francois Fillon, accusing lenders of hoarding cash. “We don’t think the banks are stepping up to task as necessary. We can withdraw the credit that we have extended to them under the state’s contract with the banks, and that will put them in difficulty. At that moment the question arises whether we should take an equity stake, change their managers, and assume control over their strategy.”

Speaking on French television, he warned: “Broadly speaking, we’ll be able to judge over the next 10 days whether they are playing the game as they should, or not.”

Continue reading »

Tags: Banks, Commerzbank, Credit Crisis, Credit Crunch, Economy, France, Government, Hypo Real Estate, IMF, mortgage crisis, Mortgages, Politics

Credit Crisis Widens

Sam Farhood, left, and James Denaro work on the floor of the New York Stock Exchange prior to the Opening Bell in New York, on Oct. 6, 2008. Photographer: Andrew Harrer/Bloomberg News

Oct. 6 (Bloomberg) — Stocks tumbled around the world, the euro fell the most against the yen since its debut and oil dropped below $90 a barrel as the yearlong credit market seizure caused bank bailouts to spread. Government bonds rallied.

The Standard & Poor’s 500 Index retreated 5.9 percent, extending the worst weekly slump since 2001, as concern slower global growth will curb demand for commodities sent Alcoa Inc. and U.S. Steel Corp. down more than 7 percent. The MSCI Emerging Markets Index headed for its biggest loss in at least two decades and exchanges in Russia and Brazil halted trading. Europe’s Dow Jones Stoxx 600 Index had its steepest decline since 1987.

Today’s plunge erased about $2.5 trillion from global equities after the German government was forced to bail out Hypo Real Estate Holding AG, overshadowing the $700 billion U.S. Treasury plan to revive credit markets. The euro weakened 6 percent against the yen, the most since 1999.

Continue reading »

Tags: Bailout, Banks, BNP Paribas, Brazil, Dow Jones, Economy, Fed, Federal Reserve, George Bush, Government, Hypo Real Estate, Lehman Brothers, Politics, Standard & Poor's, Stock Market, Treasury, U.S., UBS, Wall Street

Chancellor Angela Merkel and Finance Minister Peer Steinbrück announcing their plan for Hypo Real Estate in Berlin on Sunday. (Pool photo by Rainer Jensen)

FRANKFURT: As German leaders and bankers worked feverishly to rescue a lender considered too big to fail, the government announced Sunday that it would guarantee all private savings accounts in Germany - worth about €500 billion - in an effort to reinforce increasingly shaky confidence in the financial system.

Officials in Berlin were frantically trying to salvage a €35 billion, or $48 billion, bailout devised just a week ago for Hypo Real Estate, a major German property lender based in Munich and member of the benchmark stock index, after commercial banks withdrew their support, fearing greater losses.

Continue reading »

Tags: Credit Crisis, Credit Crunch, Economy, Fortis, Germany, Government, Hypo Real Estate, mortgage crisis, Mortgages, Politics, Taxpayers

Another top European bank is on the brink of collapse after a consortium of German financial institutions withdrew from a state-led rescue plan agreed two days ago.

Hypo Real Estate is the fifth German bank to be bailed out because of the credit crunch Photo: AP

Hypo Real Estate (HRE), the second largest mortgage lender in Germany, said the 35 billion euro (£27.3 billion) bail-out fell apart on Saturday.

The news is a fresh blow for the global financial system struggling to master an unprecedented crisis of confidence.

Hypo Real Estate was the fifth German bank to be bailed out in the wake of the credit market turmoil stemming from America.

Continue reading »

Tags: Banks, Credit Crisis, Credit Crunch, Deutsche Bank, Economy, Financial Crisis, Hypo Real Estate, mortgage crisis, Mortgages

Nicolas Sarkozy (C) flanked by Angela Merkel (L) and Gordon Brown

PARIS (AFP) - The leaders of Europe’s four main economic powers vowed to protect fragile banks in their fight against the global credit crisis as the biggest rescue in German financial history collapsed.

France, Germany, Britain and Italy put on a united front, promising a more coordinated approach to the credit crunch, although Germany’s Chancellor Angela Merkel insisted states would mainly act individually.

Continue reading »

Tags: Angela Merkel, Bank Failure, Banks, Credit Crisis, Credit Crunch, Economy, France, Germany, Gordon Brown, Government, Hypo Real Estate, mortgage crisis, Mortgages, Nicolas Sarkozy, Politics, U.K.