- The Eurozone is sliding into a depression. Only Germany appears to be doing ok.
Survey of Banks Shows a Sharp Cut in Lending in Europe!
By JACK EWING, http://www.nytimes.com/
FRANKFURT — Banks in the euro area cut lending sharply at the end of 2011, according to data published Wednesday, raising concern that Europe was on the verge of a credit crisis that could lead to a deeper recession than expected.
A quarterly survey of commercial banks by the European Central Bank showed a surge in the number of institutions that were becoming more restrictive about who they lent to, because the banks themselves were having trouble raising money and were under pressure from regulators to reduce risk.
The survey, which covered the last three months of 2011, provided more evidence of the harmful effect that the sovereign debt crisis was having on the banking system. It also somewhat validated the European Central Bank policy of providing big emergency loans to euro area banks in an attempt to stave off a full-blown lending drought.
“A credit crunch would tip the euro zone back into a severe recession,” Marie Diron, an economist who advises the consulting firm Ernst & Young, said in a statement.
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