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Politics : High Tolerance Plasticity -- Ignore unavailable to you. Want to Upgrade?

To: jim_p who wrote (17042)	10/8/2002 9:31:24 AM
From: jim_p	Read Replies (1) \| Respond to of 23153

German Financial Strains Rising All the ingredients for a financial accident are present in Germany although it is impossible to predict the dynamics. Rumors of derivatives losses at a major German bank are consistent with the strained economic and financial backdrop. The level of German private credit has been stagnant this year and is in a multi-year downtrend versus the euro area. The backdrop is worrisome: rising unemployment, ballooning loan losses and structural pressures on the banking system to contract as government guarantees on state banks (Landebanken) expire by 2005. Ominously, fiscal policy is handcuffed by the Stability Pact, and the ECB is in denial. Bottom line: after leaving rates unchanged on Thursday this week, look for the ECB to ease significantly thereafter.