America’s Newest Export

October 8th, 2008 | Sources: Wall Street Journal

Subjects: ,

Early in the economic crisis, US exports grew because the dollar was weak, and that propped up our economy enough to fend off a (unmentionable R-word).

More recently the Pound and Euro have weakened, and US exports will surely decrease as a result. Oh well, now that European banks are experiencing the same troubles as their US counterparts at least we can say America still exports something.

Germany, Belgium and Italy, welcome to your very own credit crisis!

The events in Europe the last several days have been stunning. On Sunday, Germany announced it was guaranteeing all consumer bank deposits. It then bailed out Hypo Real Estate Holding AG, a huge property lender that nearly collapsed after private lenders pulled out of a $48 billion loan last week.

Later that same day, sacre bleu, Luxembourg and Belgium allowed the French bank BNP Paribas to acquire Fortis NV, the banking and insurance colossus for $22 billion. The hastily arranged take-over came days after customers began pulling big money out of Fortis and the Netherlands nationalized its branch of the company.

There were ominous developments in Italy as well, where UniCredit announced it was taking emergency measures after its stock nosedived on fears of inadequate cash reserves.

Europe is not well positioned to handle the spreading crisis. Countries are acting in their own interests, finger pointing has begun and markets across the continent are reflecting the pessimism.


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