Is the credit crisis over? Not so fast

The bailouts have effectively tamed the financial crisis for now. But that a greater crisis for the economy still lay ahead. There is no doubt about that in mine thinking. But after speaking to a friend I now realize my view over the financial crisis and what’s going on.

In Europe the crisis is also tamed but economics problems you don’t let them disappear in a blink of a eye. There are much more problems going on effecting the credit crisis.

What would be needed. Is a bailout off 1 trillion. Then we could even start forgetting the word credit crisis. But for now it will by a big happening in history of course everyone hopes its over fast. Its not as simple as it looks. But what you can do is prepare for it and work around it as company. But the banks that are having the biggest problems. But remember other company’s will also fall in the future or will get big problems. Of course I can’t guarantee that me theory is true. Maybe the crisis is already over tomorrow or in years but it’s a real problem and that’s for real.

Even if the current financial crisis has been arrested for now, the severity of a recession here and around the world is a serious concern. And if I’m correct, that would compound the crisis.

That is what makes the stock market so tricky right now. Many folks would like to think that given the size of the wipeout we've seen, stocks must have discounted a lot of economic damage. I don't believe that, because for the longest time the stock market basically discounted nothing and especially went off a cliff here in the past couple of months. That said, I have closed out almost all of my shorts.

I don't believe the amount of damage that lies ahead has been fully discounted. However, when the stock market is stretched as far to the downside as it is now, and given all the firepower that central banks and governments keep throwing at the credit crisis. So we all have to wait and see the only tips I can give watch your stocks and your bank and take actions so you won’t by 1 off those victims off the credit crisis.

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Credit crisis the storm is just beginning?

As global markets fall sharply, We look at some of the countries affected by financial problems and what their governments are doing to alleviate the crisis.

GERMANY

State-owned savings banks in Germany reported a flood of new deposits as people look for safer accounts which are insured for 100% of their value.

The country's second-biggest commercial property lender, Hypo Real Estate, was threatened with collapse last week after incurring large amounts of bad debt.

The government attempted a bail-out, only for it to collapse on Sunday after a banking consortium withdrew support for the deal. A new bail-out was arranged with guarantees of 50bn euros ($68bn; £38.7bn), 15bn euros more than the first rescue attempt.

The German government has also announced what appear to be unlimited guarantees for private savings. However, it said there would be no legislation to give extra protection to savers.

Chancellor Angela Merkel said those financiers who did "irresponsible business" would be made accountable.

Germany clinches bank rescue deal

ICELAND

The Prime Minister of Iceland, Geir Haarde, has confirmed that negotiations have been going on with Russia for a big loan to support Iceland's banking system.

Mr Haarde said a delegation from Iceland would go to Moscow in the next couple of days to finalise the deal. He thanked Moscow for its offer of more than $5bn in emergency loans.

Iceland's government has taken control of Landsbanki, the second largest bank by value, and has dismissed the board of directors.

The bank, which also trades as the internet bank Icesave, is being taken over by the Icelandic Financial Supervisory Authority (IFSA).

Customers of the Icesave have been warned they will probably have to claim compensation for money held in their savings accounts.

Iceland's parliament has passed emergency legislation giving the government wide-ranging powers to dictate banks' operations.

Mr Haarde said the legislation would help the island avoid national bankruptcy.

Iceland will also offer an unlimited guarantee for all savings accounts.

The Icelandic krona plummeted against the dollar after the government nationalised the country's third-largest bank, Glitnir, last week. By Friday it had lost one-fifth of its value.

The government has agreed measures allowing the banks to sell off some foreign assets to help shore up the financial system.

Trading on Iceland's stock exchange remains suspended for the second day running.

Icesave savers warned on accounts

BELGIUM

The Belgian government has agreed to guarantee bank deposits of up to 100,000 euros ($136,000) - an increase of 80,000 euros.

The country's largest banking group, Fortis, has been in difficulty since it joined two other banks to purchase the Dutch bank ABN Amro, just before the global financial crisis began.

After several failed bail-out attempts, French giant BNP Paribas agreed to buy 75% of Fortis's operations in Belgium and Luxembourg. The two governments will take a minority share of the company, while its Netherlands operation has been nationalised.

IRELAND

Ireland was the first government to come to the rescue of its citizens' savings, promising on 30 September to guarantee all deposits, bonds and debts in its six main banks for two years.

The move initially prompted consternation among some European partners, but several countries have since followed suit.

Cowen defending Irish banks move

UK

Prime Minister Gordon Brown is holding talks with Bank of England Governor Mervyn King on proposals to stabilise the banking system.

UK banking shares have plunged and there are fears that more financial institutions may need government assistance.

HBOS dropped 42%, Royal Bank of Scotland (RBS) fell 39%, Barclays shed 9% and Lloyds TSB was down 13%.

The British Chambers of Commerce (BCC) has warned that Britain is already in a recession, which is worsening and could see unemployment rise by 350,000 by next year.

The UK government increased its guarantee to savers from £35,000 ($62,000) to £50,000 from Tuesday.

The Treasury is said to be considering buying large stakes in Britain's banks to encourage lending. The Northern Rock bank and the mortgage lender Bradford & Bingley have already been nationalised, and two other large groups, HBOS and Lloyds TSB, are to merge.

Banks' share prices fall sharply

SPAIN

Spanish Prime Minister Jose Luis Rodriguez Zapatero on Tuesday increased bank deposit guarantees to 100,000 euros ($136,000) from the current 20,000 euros.

Mr Zapatero told leading banks that the government would take immediate steps to increase deposit guarantees to boost confidence in the financial system.

Spain has been calling for a joint European initiative to tackle the world financial crisis.

NETHERLANDS

The Netherlands trebled the amount of savers' deposits it will protect to 100,000 euros (£77,700; $136,776).

GREECE

The Greek government said on Friday it would fully guarantee all bank deposits of citizens, but an official added that this was a "political commitment" and the banking system was not at risk.

DENMARK

The Danish government and banks on Sunday agreed a crisis plan which removes the ceiling on savings deposit guarantees, to be funded partly by banks and partly by the taxpayer.

RUSSIA

President Dmitry Medvedev announced 950 billion roubles ($36.4 bn) of long term help for banks at an emergency Kremlin meeting on Tuesday.

Russia's two leading stock exchanges were forced to close for several hours, one day after suffering massive falls in value.

Trading on the RTS and Micex bourses was postponed by the country's financial regulator after stocks lost nearly 20% of their value on Monday.

Soon after reopening, the RTS index rose by 0.58% while Micex gained 2.16%. Russian President Dmitry Medvedev called for urgent international measures to combat the global financial crisis in a statement.

"The crisis of the international financial system demands urgent joint action. It's absolutely obvious the time has come for new decisions," said Mr Medvedev.

Falls halt Russian market trading
AUSTRALIA

Australia's central bank has cut its key interest rate from 7% to 6% - a much bigger-than-expected reduction.

The Reserve Bank of Australia said that the sharp cut was justified given the prospects for growth, even though inflation is currently above target.

Prime Minister Kevin Rudd said the move would maintain financial stability and help Australia in "tough times ahead".

The cut, the bank's largest since May 1992, was well received by investors and the stock market rallied.

Observers had only expected the rate to be cut to 6.5%.

Australia slashes interest rates

JAPAN

Japanese shares dropped to their lowest level in almost five years amid growing fears over the widening financial crisis.
SAUDI ARABIA

Shares in Saudi Arabia lost about 8% of their value for the second consecutive day.

Analysts said there was panic in the markets, with investors concerned about the future for banks, and companies exposed to a faltering property market.

The Saudi stock market, the Arab world's largest, has now lost more than 40% of its value this year.

EGYPT

Egypt's main index dropped by more than 16% to its lowest level in two years.

Egypt's stock market has halved in value since May 2008.

US finance saving plan got accepted after 2nd try

House of Representatives voted 263-171 to pass an historic $700 billion measure to rescue the financial sector, few days after initially defeating the plan. President Bush immediately signed the bill into law after it was accepted.

More than 29 lawmakers who opposed the bill when it was defeated Monday by a 228-205 vote reversed their position and voted "yea."

"By coming together on this legislation we have acted boldly to help prevent the crisis on Wall Street from becoming a crisis in communities across our country," Bush said at the White House after the bill was approved.

But he warned that "it will take some time for this legislation to have full impact on our economy...it will require a careful analysis and deliberation...it cannot be accomplished overnight."

"Our eye now is to the future, to shine the bright light of accountability on the financial markets so it doesn't happen again," said Speaker Nancy Pelosi, D-Calif. "Fortunately we had a strong bipartisan vote, but we knew we'd be strong enough to pass the bill today."

She promised to hold hearings into why the financial crisis happened.

The legislation will allow the Treasury Secretary to buy troubled mortgage-backed securities and other assets to help unlock credit markets.

The plan is designed to free up capital so financial firms can increase lending and improve confidence into the economics and help place a floor under asset prices, including home prices.
Congressional leaders in the past several days paved the way for the successful vote by adding a provision to the measure to temporarily increase to $250,000 from $100,000 the amount of personal savings accounts, certificates of deposit and other bank deposits covered by the Federal Deposit Insurance Corp.

The Senate also added a $107 billion package of tax breaks, including an effort to shield nearly 25 million Americans from the Alternative Minimum Tax —- a parallel tax system that eliminates many popular deductions and credits.

The AMT was initially aimed at wealthy taxpayers, but is hitting more and more middle class workers.

But the overriding factor turning the debate around appeared to be the increasing turmoil in international credit markets just since Monday — and rising evidence the U.S. economy is falling into a big fall.

A downturn likely won't be avoided if the measure passes, but policymakers hope the plan will help to keep the economy from getting far worse.

The Labor Department Friday reported a larger-than-expected rise in joblessness, with firms shedding 159,000 workers in September. California lawmakers said state officials had called them to warn that the state is having trouble obtaining needed short-term credit to fill a $7 billion budget gap.
While other think saving this was not needed at all even stronger that this all could become more worse after.

"Sometimes in life if we're responsible we have to clean up not just the messes that we've created, but the messes that others have created as well."

Lawmakers during debate Friday implored the Treasury Department to go well beyond buying mortgage-backed securities and use its new authroity to aid firms making auto loans, student loans and other business assistance.

His statement caused Financial Services Committee Chairman Barney Frank, D-Mass., shepherding the plan through the House, to quip that he would be "ever mindful of the danger that President Bush will lead us down the road to socialism."

Supporters of the bill noted they had forced the Treasury Department, which initially sent a three-page document to Congress, to accept a number of significant changes.
As passed the bill will:

— Require the Treasury Department to work to restructure many of the mortgages it purchases to aid homeowners facing foreclosures. Negotiators dropped a provision sought by Democrats to allow judges to reduce mortgage debt in bankruptcy court.

— Curtail so-called "golden parachutes," huge compensation packages, to departing executives at firms that sell assets to the government.

— Allow the government to take an ownership share in companies that sell assets to the Treasury Department, to ensure that taxpayers share in any possible profits from the program.

— Set up a series of oversight boards to keep tabs on the Treasury Department's management of the program, and requiring electronic filing of asset sales and purchases.

For now the economics got a financial injection and the economic system is saved? That is something we will see in the coming weeks a lot off things happened in those weeks.

Dutch government takes over Fortis and ABN Amro

The government of the Netherlands is to take over all Dutch operations of financial services company Fortis. The Netherlands Central Bank bought Fortis Nederland and Fortis insurances as well as the ABN Amro operations that Fortis acquired a year ago, for 16.8 billion euros.

The move was announced on Friday evening by prime minister Jan Peter Balkenende, finance minister Wouter Bos and central bank president Nout Welling. The nationalisation came after last weekend's bail-out plan. Dutch, Belgian and Luxembourg governments pledged to inject 11.2 billion euros in the multinational company on Sunday. Secret negotiations for the new agreement started on Tuesday and were finalized on Friday.

Fortis had come into "severe solvency problems", Bos said, because consumers had withdrawn their savings and other banks wouldn't loan money to the company.

Wellink said that two banks which are "part of the capillary system of the Dutch economy have been rescued". Fortis and ABN Amro have a 40 percent market share in the small business sector. The three parts of Fortis employ 45,000 people in the Netherlands.

Finance minister Bos said that it is important to stabilize the Dutch banking sector, "but above all for Dutch savers and customers to know their money is safe." Not that all the dutch people will lose their trust into the dutch banks.

Wellink said the integration of ABN Amro into Fortis will proceed. The merger will offer "substantial benefits", according to the central bank president.

According to the ministry of finance the nationalization is "a temporary move". Fortis is to be sold once the crisis on the global financial markets has quieted down to ABN Amro.

As you can see Fortis just came out off trouble as it looked like. But the real thing was there was more mess then they expected. So that’s why they decided to take the Dutch banks over to hold the trust and not that everyone put their money off their banks.

EU leaders discussing the bank crisis in Paris

A European financial summit to discuss the current global crisis is set to take place in Paris on Saturday.

Leaders from Netherlands, Britain, Germany and Italy, together with the president of the European Commission and European Central Bank chief, will be attending.

Rumors of a 300bn euro’s (£237bn, $417bn) EU-wide rescue similar to the plan being discussed by the US Congress have been denied by Sarkozy's office.

President Sarkozy wants a coordinated European response to the crisis. He see it going the wrong way so he decided that it was time for a meeting.

Calls for European action follow the bail-out of both Bradford and Bingley, which cost the UK government around £14bn, and Fortis Bank, which cost the governments of Belgium, Luxembourg and the Netherlands around £9bn. So it is time for some action or else the future will not by good.

Meanwhile, the Irish government's unilateral move to safeguard all deposits, bonds and debts in the Republic of Ireland's biggest banks and building societies for the next two years has raised concerns about competitive disadvantage among UK banks.

However, according to Karel Lannoo from Brussels think tank the Centre for European Policy Studies, it is a mistake to allow individual European countries to deal with their own banks.

"Most of these banks, certainly the 50 largest European banks have outgrown their national boundaries," he said.

Germany has made its opposition to any coordinated European bail-out plan known ahead of the meeting, while the chairman of eurozone finance ministers has also rejected any need for a European rescue fund for distressed banks.

Eurogroup chairman Jean-Claude Juncker said Europe did not need a similar escapes like the US's $700bn (£396bn) plan to take so-called toxic assets off banks' balance sheets.

British Prime Minister Gordon Brown is also skeptical of the need for any Europe-wide plan to cover the credit crisis.

However, a French civil servant is reported to have proposed a 300bn euro bail-out fund, and the Netherlands has proposed the creation of a European reserve fund to come to the aid of ailing banks before they fail.

Despite the differing views, Gordon Brown's spokesman said he did not expect discussion of an EU-wide bank fund at the meeting.

The propose off the meeting is to get some clear agreements how to handle against the credit crisis if the situation become more worse.

UK house prices continue to fall

UK house prices dropping by 1.7% in September, according to the Nationwide.

The lender recorded a 12.4% annual drop in prices, pushing the cost of the average UK home down to £161,797, more than £20,000 less than a year ago.

House prices were down year-on-year across the UK, with southern England suffering worse than the north.

The rate of fall, which was the same as in August, has remained relatively unchanged in the past three months.

But the annual fall was one very big 1 for 17 years.

A homeowner on being told to drop her original asking price

Ms Earley said that a distinctive feature of the July to September period was the accelerating fall in house prices in the south of England compared with the north.

Four of the six regions registering double-digit price declines were in the South, with East Anglia and the South West showing the biggest annual drops - both 11.4%.

Northern Ireland showed the steepest decline in house prices across the UK, which are now 29.8% lower than a year ago.

But the price rises had been so rapid in recent years, that prices are now only back to the same level as the third quarter of 2006.

In Scotland, where house prices had risen in the second three months of the year, recorded a 5% drop between July and September compared with the previous three months. That was a bigger drop than the UK average of 4.6%.

Wales has the smallest price fall compared with other areas of the UK, with a three-month on three-month fall of 1.9% in July to September.

The recent price falls made a lot off attention experts believe the price lowering trend will hold on for a while.