Socio-Economics History Blog

Socio-Economics History Blog

Global Financial System is on The Edge! Banking Crisis Set To Trigger New Credit Crunch!

by mosesman
RIP: Rest In Pieces
  • All the warning signs are there for a catastrophic global collapse. Are you prepared? The stock markets are tanking despite the German government approval of the EFSF bailout fund. It makes no difference. The EFSF is too little too late. The amount needed is probably in the order of US$5-7 T according to Bob Chapman. Got physical gold yet? (emphasis mine)
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    Banking crisis set to trigger new credit crunch
    By , http://www.telegraph.co.uk/
    The global financial system is on the edge of a new credit crunch as the cost of insuring the bonds of banks across the world hits new highs, analysts have said.
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    Credit default swaps on lenders as far afield as China and Australia, countries that until recently seemed immune to the chaos, have doubled in the last two months to levels not seen since the financial crisis.
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    In Europe, French and Belgian government officials are due to meet on Monday to discuss the crisis enveloping Dexia as speculation mounts about a possible break-up of the Franco-Belgian lender.
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    Last week, the cost of insuring Dexia bonds hit an all-time high of 900 basis points, nearly double the level just two months ago, meaning the annual cost to insure €10m (£8.59m) of the bonds is £900,000.
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    “The money ran out in June and what you are seeing now is the beginning of a new credit crunch, except this time it will be truly global, not Western,” said one senior London-based credit analyst.
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    Dexia, along with other European lenders, has been hard hit by the closure of the interbank lending markets and the continuing unwillingness of investors to buy the bonds of eurozone banks.
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    “Nothing is really working at the moment. None of the markets are functioning. Until Greece defaults it’s hard to see any resolution,” said one senior London-based credit analyst.
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    In China the publicly quoted cost of insuring the bonds of its three lenders for whom prices are available all closed on Friday at the highest levels in more than two years.
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    ….. for the complete article click here!

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