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Strategies & Market Trends : The coming US dollar crisis -- Ignore unavailable to you. Want to Upgrade?

To: ggersh who wrote (17731)	2/17/2009 6:18:45 PM
From: RockyBalboa	Read Replies (1) \| Respond to of 71456

Thats a good idea, thanks; as we approach uncharted territory a longer term look may do it. And yes on many boards I read about S&P 6. You know what shocks me the most, these minutes? Well, in 2 days the biggest local, CEE- heavy banks got clobbered by 30% or so, and aslo insurers from their already reduced prices. Right now, Bank directors and economists come out on all type of media and blab blab blab how irrationally cheap stocks are... they still are in a state of UTTER DENIAL... They have no clue that people simply cannot repay their loans paricularly in CEE. THe market sees it differently: For example, Austrian Government bonds, usually tied to Germans with some 10bp now trade at higher spreads than Italy! Go figure... they trade up to 140bps over German Bonds. Message 25414048 Message 25414030 UPDATE 1-E.Europe banks crisis weighs on bank ratings-Moody's By Boris Groendahl VIENNA, Feb 17 (Reuters) - The recession in emerging Europe will be more severe than elsewhere due to large imbalances, and will put the financial strength ratings of local banks and their western parents under pressure, Moody's said on Tuesday. The combination of higher provisions for bad debt, the rise in banks' borrowing costs and falling currencies will weigh down banks' profitability and help erode their capital base, the ratings agency said in a special comment on the region's banking sector released overnight. The warning alarmed markets on Tuesday, sending the euro , emerging European currencies and bank stocks lower on concerns the region's crisis may become a vicious circle. "Deteriorating financial strength of East European subsidiaries has a negative spillover effect on their West(ern) European parents," Moody's said in the note. "A widespread deterioration in the economic health of core markets in Eastern Europe is exerting negative rating pressure on subsidiaries and eventually may also lead to a weakening of the parent bank's ratings," it said. Western European banks led by UniCredit , Erste Group Bank , Raiffeisen International and Societe Generale have bought most of emerging Europe's banking sector in past years to tap into the rampant credit growth that fuelled the region's boom. Their eastern franchise has in the past boosted parents' profits and helped them resist the temptation of structured debt products, but this boon has turned into risk now that economic crisis has the region firmly under control. The euro hit its lowest in more than two months against the dollar on Tuesday as the report added to investors' worries over the region. The Polish zloty , Hungarian forint and Czech crown all fell to new lows. Shares in the western lenders that control emerging Europe's banking market also slumped, with Austria's Erste Group Bank , Belgium's KBC and Societe Generale all among the top losers in the FTSEurofirst <.FTEU3>. "There is no doubt that markets have decided that emerging Europe is the subprime of Europe and now everybody is running for the door," said Lars Christensen, an economist at Danske Bank. YOUNG BANKS Modern banks in the region are still young, which means that relatively low confidence may trigger bank runs more quickly then in the West, and that banks' loan books are so far largely untested by a severe economic downturn, Moody's said. Most of the western banks active in the region have assets in a number of countries and may become more selective in funding their subsidiaries, heightening the risk for weaker countries. "Banks allocate capital to their subsidiaries depending on expected risk-adjusted returns," the agency said. "Thus, risks are particularly skewed to the downside in countries that have been identified as more vulnerable." However, the agency notes that there are motives for banks to continue funding emerging European units. Parent banks abandoning one country may destroy clients' trust in another country, creating negative effects of its own, Moody's said. With a relatively small number of banks concentrated in a handful of countries, some very exposed western European sovereigns have come under pressure for fears of a knock-on effect of potential emerging European bank failures. Austria is by far the most exposed to the region, as its banks have lent the equivalent of 75 percent of its GDP to clients in emerging Europe. Belgium's, Sweden's and Greece's exposure is also substantial. [ID:nL2246926] The spread of Austrian and Greek 10-year bonds over German bunds widened to a lifetime high of 124 basis points and 300.8 basis points, respectively, on Tuesday. "The whole path of development in eastern Europe has been to borrow from abroad to fund consumption and investment, and clearly that has become unsustainable," said Neil Shearing, economist at Capital Economics. (Editing by Patrick Graham) ((boris.groendahl@reuters.com; +43 1 53112-258; Reuters Messaging: boris.groendahl.reuters.com@reuters.net)) Keywords: BANKS/RATINGS

To: ggersh who wrote (17731)	2/18/2009 4:58:10 PM
From: RockyBalboa	Read Replies (1) \| Respond to of 71456

Meanwhile, the EU does not know what to do in the current crisis, their commissioners are bumbling around...and make things worse. No sign of help yet. First they want some dead bodies floating around then they perhaps look for the cause of the illness. >>>>>>>>>>>>>>>>>>>>>>>>> UPDATE 1-EU Commission worried over forex, banks in E.Europe (Updates with talks on bank at EU summit) By Marcin Grajewski BRUSSELS, Feb 18 (Reuters) - The European Union voiced concern on Wednesday over the fall of currencies in the bloc's eastern European members outside the euro zone, urging their authorities to avoid statements exacerbating the problem. EU Economic and Monetary Affairs Commissioner Joaquin Almunia said he was worried about the situation of banks in central, eastern and southern Europe, pointing to EU member Romania as well as non-EU states -- Ukraine, Croatia and Serbia. Presenting the European Commission's assessments of EU members' mid-term fiscal plans, Almunia said the bloc was ready to help, although aid would be different in the case of EU and non-EU members. The comments came as central and eastern Europe emerged as especially hard hit by the global financial crisis, prompting a currency and stock sell-off in the region. The Polish zloty fell to near all-time lows against the euro this week before regaining some ground on Wednesday while the Hungarian forint set a new record low. The Czech crown has also been under pressure. "I am ...concerned about the volatility of the exchange rate in EU countries with floating regimes," Almunia told a news conference in a reference to Poland, Hungary, Romania and the Czech Republic. He urged authorities in those countries to stop making public statements that might be harming investor sentiment and the financial market. "I am also concerned by the possibility that some public statements have accelerated this evolution," he said. "I would ask all the authorities ... to be careful when they make public statements because the markets are very nervous, and sometimes they don't understand very well some of the statements," he said. Almunia did not elaborate. SURPRISING STATEMENTS In Poland, central bank governor Slawomir Skrzypek has publicly questioned the government's goal to join the euro zone in 2012 and to lock the zloty in the ERM2, a two-year currency stability test, in the first half of 2009. Polish Prime Minister Donald Tusk took a rare step on Tuesday of disclosing the level of the zloty exchange rate at which the government would be ready to defend the currency. [ID:nLH310660] On Wednesday, a senior ruling Polish party official surprised the markets by saying Poland had already started official talks joining the ERM2 with the European Central Bank, negotiations that are usually very discreet. Almunia said he shared the concern of Austria about the deteriorating economic situation of some central and eastern European countries, which is putting pressure on local units of some big Western banks, such as Austria's Erste . "I fully share their concern, everybody shares their concern about the risks involved in the situations of countries such as Ukraine, or Serbia, or Croatia, or Romania," he said. He added he heard of no official plan from Austria to help those countries and their banks. Diplomats say Austria has been lobbying for such aid, but has not won much support. Deputy Czech Prime Minister Alexandr Vondra, whose country holds the EU's rotating presidency, said the situation of eastern banks would be discussed an emergency EU summit on March 1 -- but only as part of a wider debate. "The crisis is a huge problem, in particular for the banks active in this region... We need to approach the issue in a coordinated way," he told reporters in Brussels. Almunia said the EU was ready to help those countries, although he did not elaborate how. "We cannot give to all of them the same kind of support. We have to differentiate in terms of the different positions of each one of these member states regarding our own instruments," he said. (Editing by Jason Neely) ((Brussels newsroom +32 2 287 6841, fax +32 2 230 5573)) Keywords: EU EMERGINGEUROPE/

To: ggersh who wrote (17731)	3/1/2009 3:10:57 PM
From: RockyBalboa	2 Recommendations Read Replies (4) \| Respond to of 71456

Now it´s official... EU not considering any help for their ailing neighbours and industries. Here comes the depression: EU Rejects Pleas for Eastern Aid Package, Bailout for Carmakers Email \| Print \| A A A By James G. Neuger March 1 (Bloomberg) -- European Union leaders rejected pleas for an aid package for eastern Europe and EU funds for carmakers, bowing to German concerns over budget deficits as the economic slump deepens. EU leaders vetoed a call by Hungary for loans of 180 billion euros ($228 billion) for ex-communist economies in eastern Europe, and told automakers such as General Motors Corp.’s European arm to look to national governments for help. “I would advise against taking huge numbers into the debate,” German Chancellor Angela Merkel told reporters at an EU summit in Brussels today. “I see a very different situation -- you can compare neither Slovenia nor Slovakia with Hungary.” The worst economic crisis since World War II is devastating eastern Europe, putting at risk EU goals of stitching together a continent-wide free market. The EU’s $17 trillion economy will contract 1.8 percent in 2009, the European Commission predicts. Latvia, a former Soviet republic that was the bloc’s star performer only three years ago, will shrink 6.9 percent. Growth in Poland, the biggest eastern economy, will tumble to 2 percent, the slackest pace since 2002. Investors fleeing eastern Europe to cover losses at home have pushed down Poland’s zloty by 28 percent against the euro in the past six months, Hungary’s forint by 21 percent, Romania’s leu by 18 percent and the Czech koruna by 12 percent. Nine eastern leaders held a pre-summit meeting early today to warn the West against putting up new walls in Europe, five years after the EU overcame historic divisions by admitting its first eastern members. ‘Protectionism’ “We all wish that Europe avoids the temptation of protectionism,” Polish Prime Minister Donald Tusk said. Merkel, representing the biggest contributor to the EU budget, said aid for eastern Europe needs to be channelled through international institutions like the International Monetary Fund. Last week three international lenders -- the World Bank, the European Bank for Reconstruction and Development and the European Investment Bank -- announced loans of up to 24.5 billion euros for eastern European banks. As budget deficits swell beyond the EU’s limit of 3 percent of gross domestic product, Merkel’s plea for “a return to solid fiscal management” met with a mixed response. The EU set no deadline for governments to erase their deficits. So far, national stimulus packages, welfare spending and cash from the EU’s central budgets have pumped 3.3 percent of EU-wide GDP into the economy, the Brussels-based commission estimates. As a result, it forecasts that the 27-nation EU’s overall budget gap will rise to 4.4 percent of GDP in 2009 from 2 percent last year. Hungary’s Aid Hungary, already the recipient of 6.5 billion euros in EU aid, also sowed divisions among eastern leaders, with some saying the EU’s newcomers shouldn’t be singled out as an economic trouble spot. “I’m strongly against creating small blocs inside the European Union,” Estonian Prime Minister Andrus Ansip said. “We have to keep together and act together.” Opposition to a one-size-fits-all approach to eastern Europe’s economic woes also came from Philippe Maystadt, head of the Luxembourg-based EIB, an EU-operated bank that provides project finance. “Some countries are in a better position than others,” Maystadt said today. “That’s the reason why we think we must keep a country-by-country approach.” Sarkozy Clash French President Nicolas Sarkozy triggered an east-west clash over protectionism by saying on Feb. 5 that it “isn’t justified” for recession-hit French carmakers to build plants in places like the Czech Republic instead of creating jobs at home. European regulators yesterday forced Sarkozy to guarantee that 6 billion euros in loans to Renault SA and PSA Peugeot Citroen, France’s two largest carmakers, won’t put foreign rivals at a disadvantage. The leaders rejected calls to dip into EU funds to prop up the car industry, which is likely to suffer a sales drop of as much as 18 percent this year, according to EU forecasts. Instead, the leaders said it is up to each country to step in. General Motors, the biggest U.S. carmaker, last week sought 3.3 billion euros in assistance for its European operations. GM last week reported a loss of $30.9 billion for 2008, including $2.8 billion from Europe. The EU has already promised to double EIB lending for green transport projects including cleaner cars to 4 billion euros in each of the next two years. Merkel called today for a further boost to spur “modern engine technologies.” To contact the reporter on this story: James G. Neuger in Brussels at jneuger@bloomberg.net Last Updated: March 1, 2009 11:29 EST