Uncertainty looms large over European banks
Wednesday, 19 May 2010
From Fazle Rashid
NEW YORK, May 17: The $1.0 trillion bailout announced by Europe primarily to help Greece and other ailing eurozone economies momentarily calmed fear and nervousness but uncertainty is looming large once again over worries that " the continents' biggest banks face strains that will hobble European economies".
The Euro fell to its lowest depth with investors abandoning the currency and stocks and taking protective shelter by buying gold and other assets. Europe is facing severe tension and markets have become fragile, the New York Times quoted Jean-Claude Trichet, President of the European Central Bank as saying in a front page report today.
European banks are facing two fold problems. Short term borrowing cost is rising which lead institutions to cut back on new loans and call in old ones crippling economic growth, the NYT said. Volatility of euro sliding more than 8.0 per cent in the last month is unnerving managers at factories across the continent. Bourses and bank shares in Europe plunged on Friday with Wall Street following suit
The International Monetary Fund in a warning has said the high levels of public indebtedness could weigh in on economic growth for years. The World's budget deficit as a percentage of gross domestic product now stand at 6.0 per cent up from just 0.3 per cent before the financial crisis.
Germany is urging other eurozone countries to formulate laws seeking to avert overspending to stabilise the Euro. Finance ministers of Eurozone countries will sit today to discuss the euro 750 billion bailout package.
NEW YORK, May 17: The $1.0 trillion bailout announced by Europe primarily to help Greece and other ailing eurozone economies momentarily calmed fear and nervousness but uncertainty is looming large once again over worries that " the continents' biggest banks face strains that will hobble European economies".
The Euro fell to its lowest depth with investors abandoning the currency and stocks and taking protective shelter by buying gold and other assets. Europe is facing severe tension and markets have become fragile, the New York Times quoted Jean-Claude Trichet, President of the European Central Bank as saying in a front page report today.
European banks are facing two fold problems. Short term borrowing cost is rising which lead institutions to cut back on new loans and call in old ones crippling economic growth, the NYT said. Volatility of euro sliding more than 8.0 per cent in the last month is unnerving managers at factories across the continent. Bourses and bank shares in Europe plunged on Friday with Wall Street following suit
The International Monetary Fund in a warning has said the high levels of public indebtedness could weigh in on economic growth for years. The World's budget deficit as a percentage of gross domestic product now stand at 6.0 per cent up from just 0.3 per cent before the financial crisis.
Germany is urging other eurozone countries to formulate laws seeking to avert overspending to stabilise the Euro. Finance ministers of Eurozone countries will sit today to discuss the euro 750 billion bailout package.