Edited by Jessica Tesoriero
Edited by Lauren Abuouf (10:16pm October 20)
Trouble Spreads to Europe
Published in La Stampa
(Italy) on 29 September 2008
by (link to original)
(Italy) on 29 September 2008
by (link to original)
Translated from
by Jose O'Brien.
Edited by .
BRUSSELS - The U.S. financial crisis has begun to infect even Europe, where governments have been forced into a series of bank rescue plans. The panic has overwhelmed the stock exchanges; even Milan, which has not been very well convinced of the U.S. rescue plan, has shown a fall of more than 4 percent for Italy. Mario Draghi has reassured that the liquidity of banks is at adequate levels while more generally, he said European financial authorities are, "determined to win the battle to restore confidence," in the markets and are, "alert to make all decisions that will be needed."
On the Old Continent, it is a forgettable Monday. Belgium, Luxembourg and The Netherlands have partially nationalized the insurance giant Fortis. The rescue, the first of an E.U. bank, was decided in the presence of the ECB and with the consent of the E.U.s antitrust branch, providing an injection of 11 billion, the sale of a stake in ING ABN AMRO, and the temporary oversight of Fortis acitivities to the three governments.
Meanwhile in London, after Northern Rock, the loan bank Bradford & Bingley, whose deposits go to Abbey, the British bank controlled by the Santander group, has also been nationalized. French President Nicolas Sarkozy has called for a European summit to discuss a "new global financial system" and will convene tomorrow for a summit of banks and insurers, while fears grow over the Franco-Belgian group Dexia.
In Germany, the government, along with a consortium of banks, has rushed to the aid of the bank Hypo Real Estate, guaranteeing a line of credit of 35 billion. The markets reacted badly to the risk of infection and European stock markets lost confidence, even though the U.S. Congress will attempt to reach an agreement for the $700 billion rescue plan, which will be voted on today in the House of Representatives and on Wednesday in the Senate. The Asian exchanges closed in red, while those in Europe are losing around 3 percent by midday. The euro has fallen below the exchange rate of $1.43 and oil is now under $103 per gallon. The U.S. President George W. Bush spoke again and asked Congress to, "send a strong message to markets, promptly approving the rescue plan to avoid a financial crisis involving the economy, though he adds, the economic difficulties will remain for some time.
The plan provides the U.S. Treasury the authority to buy "junk" shares immediately: first by using $250 billion, then an additional $100 billion which would be upon the discretion of the White House; the other $350 billion would be reviewed by Congress. The plan gives authority for the purchase and the pricing of shares to the Treasury, which will have the right to allow public participation. They also provided restrictive measures for the directors of companies participating in the rescue.
On the Old Continent, it is a forgettable Monday. Belgium, Luxembourg and The Netherlands have partially nationalized the insurance giant Fortis. The rescue, the first of an E.U. bank, was decided in the presence of the ECB and with the consent of the E.U.s antitrust branch, providing an injection of 11 billion, the sale of a stake in ING ABN AMRO, and the temporary oversight of Fortis acitivities to the three governments.
Meanwhile in London, after Northern Rock, the loan bank Bradford & Bingley, whose deposits go to Abbey, the British bank controlled by the Santander group, has also been nationalized. French President Nicolas Sarkozy has called for a European summit to discuss a "new global financial system" and will convene tomorrow for a summit of banks and insurers, while fears grow over the Franco-Belgian group Dexia.
In Germany, the government, along with a consortium of banks, has rushed to the aid of the bank Hypo Real Estate, guaranteeing a line of credit of 35 billion. The markets reacted badly to the risk of infection and European stock markets lost confidence, even though the U.S. Congress will attempt to reach an agreement for the $700 billion rescue plan, which will be voted on today in the House of Representatives and on Wednesday in the Senate. The Asian exchanges closed in red, while those in Europe are losing around 3 percent by midday. The euro has fallen below the exchange rate of $1.43 and oil is now under $103 per gallon. The U.S. President George W. Bush spoke again and asked Congress to, "send a strong message to markets, promptly approving the rescue plan to avoid a financial crisis involving the economy, though he adds, the economic difficulties will remain for some time.
The plan provides the U.S. Treasury the authority to buy "junk" shares immediately: first by using $250 billion, then an additional $100 billion which would be upon the discretion of the White House; the other $350 billion would be reviewed by Congress. The plan gives authority for the purchase and the pricing of shares to the Treasury, which will have the right to allow public participation. They also provided restrictive measures for the directors of companies participating in the rescue.
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