Europe - Economic Data & News 01 (May 08 - Oct 08)

[millionairemind]

Lehman Toxic Debt Advice Led Leipzig Bank to Ruin Via Dublin

By Aaron Kirchfeld and Jacqueline Simmons

Oct. 28 (Bloomberg) -- Teachers at the Clara Zetkin Middle School in Freiberg, Germany, were counting on a budget surplus to ease staff shortages across the state of Saxony.

Those hopes have faded as a result of bets made by state- owned Landesbank Sachsen Girozentrale on structured investments backed by mortgages in the U.S. The German lender loaded up on asset-backed securities and derivatives manufactured and sold by Wall Street amounting to more than 27 times the bank's equity. Now Saxony, which pledged taxpayer money as a guarantee against losses, is on the hook for 2.8 billion euros ($3.5 billion).

[millionairemind]

Hungary to get $25.1 billion in aid
ReutersPublished: October 29, 2008

WASHINGTON: The International Monetary Fund, the European Union and World Bank on Tuesday agreed to a $25.1 billion economic rescue package for Hungary to bolster confidence in its economy hit by the global financial crisis.

The IMF said in a statement it had reached an agreement with Hungary for a $15.7 billion loan program, while the European Union stood ready with an additional $8.1 billion in financing and the World Bank another $1.3 billion. The IMF loan will be disbursed over 17 months.

It is the biggest international rescue package for an emerging market economy since the start of the current global crisis and is the first for an EU-member country. Last week the IMF approved a $2.1 billion deal for Iceland and a $16.5 billion program for Ukraine.

The IMF said its board could approve the Hungary deal in early November under emergency rapid-response procedures activated earlier this month as the credit market crisis spread from the United States and Western Europe.

"The Hungarian authorities have developed a comprehensive policy package that will bolster the economy's near-term stability and improve its long-term growth potential," Dominique Strauss-Kahn, IMF managing director, said in a statement.

[iam802]

European and UK banks are five times more exposed to Emerging Markets than banks in US and Japan; IMF in support talks with several countries

http://www.finfacts.com/irishfinancenew ... 5088.shtml

As a percentage of GDP, European and UK banks are about five times more exposed to Emerging Markets (EM) than the US and Japanese banks. US investment bank Morgan Stanley says that pressures on EM economies, therefore, could have a particularly negative "boomerang’" effect on European banks. For currencies, if EMs becomes the second epicentre of the global financial crisis, the Euro seems more at risk than the US dollar or Japanese yen.Meanwhile, the IMF (International Monetary Fund) says it is moving quickly to help EMs battered by fallout from global financial turmoil. It is providing a $16.5 billion loan to Ukraine while discussions with Hungary are ongoing. Last Friday, the IMF announced a $2.1 billion loan for embattled developed country Iceland.

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[millionairemind]

Looks like UK is in worse shape than US..

House prices fall 14.6pc in a year
House prices have fallen for the twelfth month in a row and are now 14.6pc lower than last year, the latest figures from Nationwide show.

By Graham Ruddick
Last Updated: 7:44AM GMT 30 Oct 2008

Nationwide survey shows house prices fell for the twelth month in a row. Prices fell 1.4pc in October and the average house has seen £27,000 wiped off its value in the past twelve months.

The number of completed housing sales has now fallen to its lowest level since the Nationwide series began in 1974, the building society added in its lastest House Price Survey, driving the decline in prices.

The crisis in the financial sector and the latest Government data suggesting a recession is imminent is likely to worsen the housing market slump and has “uncomfortable implications”, Nationwide said.

“A looming recession and continued financial market instability have uncomfortable implications for the housing and mortgage markets, and will undoubtedly affect the pace of recovery in house prices,” Fionnuala Earley, the Nationwide’s chief economist, said.

“However the speed of the economic slowdown and the determination on the part of central banks to return stability to the financial markets does mean that interest rates are likely to continue to be cut sharply which will make life easier for borrowers on variable rate loans and those coming to the end of fixed rate deals.
http://www.telegraph.co.uk/finance/econ ... -year.html

[iam802]

Deutsche Bank Posts Profit as Rules Limit Writedowns

http://www.bloomberg.com/apps/news?pid= ... refer=home

Oct. 30 (Bloomberg) -- Deutsche Bank AG, Germany's biggest bank, reported a surprise third-quarter profit after new accounting rules allowed it to book fewer asset writedowns.

The bank rose as much as 9.1 percent in Frankfurt trading after posting net income of 435 million euros ($573 million). Analysts had predicted a loss. Rules easing requirements for marking down investments reduced writedowns for the quarter by 845 million euros to 1.2 billion euros.

.........

[millionairemind]

This will give Trichet more room to cut rates..

Oct 31, 2008
Eurozone inflation drops to 3.2%

BRUSSELS- INFLATION in the 15 nations using the euro fell in Oct to 3.2 per cent as oil prices slumped, according to a first estimate from the European Union's Eurostat data agency on Friday.

The rate, which compared with 3.6 per cent in Sept, marked the third month running that consumer prices have fallen since hitting a record 4.0 per cent in Jul on the back of all-time high oil prices.

Since reaching a peak in July of nearly US$150 (S$222) a barrel, oil prices have more than halved in the face of a deteriorating global economic outlook to about US$64 a barrel on Friday.

Although economists had expected inflation to fall slightly further to 3.1 per cent, Oct's drop nonetheless brought consumer prices a big step closer to the European Central Bank's comfort zone of a rate close to but less than 2.0 per cent. -- AFP