Europe’s banks face a $2 trillion dollar shortage

[dreamdancer 0]

this is looking more and more like we could be in depression territory...

Quote

European banks face a US dollar “funding gap” of almost $2 trillion as a result of aggressive expansion around the world and may have difficulties rolling over debts, according to a report by the Bank for International Settlements.

The BIS said European and British banks have relied on an “unstable” source of funding, borrowing in their local currencies to finance “long positions in US dollars”. Much of this has to be rolled over in short-term debt markets. The currency mismatch has become a potential risk for banks as the dollar continues to climb against the euro and Swiss franc, and especially sterling and Sweden’s krona.

“The build-up of large net US dollar positions exposed these banks to funding risk, or the risk that their funding positions could not be rolled over,” said the BIS.

The report, entitled “US dollar shortage in global banking”, helps explain why there has been such a frantic scramble for dollars each time the credit crisis takes a turn for the worse. Many investors have been wrong-footed by the powerful rally in the dollar against almost all currencies, except the yen.

British banks have borrowed some $800bn in sterling to make dollar investments and loans. By mid-2007 they had accumulated what amounted to a $300bn net “short position” on the US dollar. The latest BIS data up to the third quarter of 2008 shows that this exposure has been trimmed by “deleveraging” but it still largely hanging over the UK financial institutions.

http://www.telegraph.co.uk/finance/financetopics/recession/4939796/Europes-banks-face-a-2-trillion-dollar-shortage.html

stay away from moving propellers - they bite
blue skies from thai sky adventures
good solid response-provoking keyboarding

[shropshire 0]

About time we ditched the Dollar.

(.)Y(.)
Chivalry is not dead; it only sleeps for want of work to do. - Jerome K Jerome

[dreamdancer 0]

and replace it with the euro?

stay away from moving propellers - they bite
blue skies from thai sky adventures
good solid response-provoking keyboarding

[shropshire 0]

Too right

(.)Y(.)
Chivalry is not dead; it only sleeps for want of work to do. - Jerome K Jerome

[dreamdancer 0]

perhaps a merger - the eurodollar?

(that should be big enough to take on china)

stay away from moving propellers - they bite
blue skies from thai sky adventures
good solid response-provoking keyboarding

[shropshire 0]

(.)Y(.)
Chivalry is not dead; it only sleeps for want of work to do. - Jerome K Jerome

[dreamdancer 0]

the chinese dragon (or is it a panda?) stirs...

Quote

Addressing China's rubber-stamp parliament, the National People's Congress, Mr Wen outlined a raft of public-spending measures to boost consumption in China in the face of tumbling demand for its exports from Western consumers.

A mixture of tax-breaks for the rural poor, increased availability of consumer credit and new government spending on welfare and rural infrastructure will be aimed at re-orientating Chinese export-driven economy towards greater domestic consumption.

"We will introduce policies and measure to encourage consumption and vigorously develop consumer credit. We will do all the work of implementing the programs for bringing home appliances, agricultural machines and automobiles and motorbikes to the countryside," Mr Wen told delegates.

"The Global financial crisis continues to spread and get worse," he warned, "Demand continues to shrink on international markets; the trend towards global deflation is obvious and trade protectionism is resurging."

http://www.telegraph.co.uk/news/worldnews/asia/china/4941360/China-to-maintain-growth-despite-most-difficult-year.html

stay away from moving propellers - they bite
blue skies from thai sky adventures
good solid response-provoking keyboarding