Subprime Is Truly Global Now [Housing Tracker]

Seeking Alpha's Housing Tracker is a collection of housing-related excerpts from various sources, grouped by topic. Feel free to post any interesting links on the subject in the comments section below.

Quotes of the Day

“The precarious global environment means the weakest links in Europe are now falling. If banks continue not to lend to each other we'll see more failures.” - Mamoun Tazi, an analyst at MF Global Securities Ltd. in London (Bloomberg, Sept. 29) 

“A certain idea of globalization is dying with the end of a financial capitalism that had imposed its logic on the whole economy and contributed to perverting it. The idea of the all-powerful market that could not be contradicted by any rules, by any political intervention [is] a crazy idea. The idea that the market is always right is a crazy idea… Self-regulation, to fix all problems, is over. Laissez-faire is over.” – French President Nicolas Sarkozy. (NY Times, Sept. 25)

Global Subprime Fallout

Rescues Going On Everywhere. “While we were watching Congress put together a $700 billion bailout, there were bailouts going on in six other countries. Britain seized Bradford & Bingley, a large mortgage lender. Germany provided an emergency loan to Hypo Real Estate, a real estate lender. And three European countries — Netherlands, Belgium and Luxembourg — bailed out Fortis, a large bank and insurance company. Then today Iceland joined the fray, bailing out Glitner Bank, the third largest in that country.” (NY Times, Sept. 29)

KFW Fires Two Board Members Over Lehman Transfer. “German state lender KfW has fired two board members over the transfer of around 300 million euros to Lehman Brothers on the day the U.S. bank filed for bankruptcy, the finance and economy ministries said on Monday. KfW's board of supervisory directors decided that Peter Fleischer and Detlef Leinberger would have to leave their posts with immediate effect, the ministries said in a statement. The two board members had already been suspended. KfW has said it mistakenly transferred the funds to Lehman to unwind a swap agreement, in which two counterparties agree to exchange one stream of cashflow against another stream.” (Reuters, Sept. 29)

Fortis Names New CEO After Shares Plunge.  “Fortis NV named a new chief executive officer on Friday, after the banking and insurance company's shares fell 21 percent over worries about its solvency. Filip Dierckx, 52, was appointed to replace Herman Verwilst, who was named interim CEO in July after the abrupt departure of Jean-Paul Votron. Dierckx previously led Fortis's banking arm. Verwilst is to remain on the management board, Fortis said.” (Daily Herald, Sept. 28)

Financial Crisis Has Dragged JJB Out Into The Cold. “HBOS believed its client was in breach of lending terms. JJB demurred. The auditor – after heated discussions with directors – raised it as an issue that could threaten the retailer’s viability. The shares fell by half… The attempt by JJB to cast HBOS as a villain of the piece is an interesting sideshow but not the main event. Whether JJB strayed to the wrong side of one covenant because of non-cash provisions is also beside the wider point. What is important is that a bank exercised its right significantly to tighten the terms. That might not have happened only a few months ago – certainly, Barclays, another lender to JJB, was amenable then to overlooking a potential technical breach.” (Financial Times, Sept. 26)

Ireland Is First Eurozone Nation In Recession. “Irish Central Statistics Office: Ireland's economy, rocked by a domestic property market meltdown, entered recession for the first time in 25 years after shrinking in Q2’08. European neighbors Britain, France, Germany, Italy and Spain sit on the brink of recession amid global economic turmoil. Denmark, which is not in the eurozone, fell into recession -- two successive quarters of negative growth -- earlier this year... Irish gross domestic product shrank 0.5% in Q2’08 compared with the previous three-month period when the economy contracted 0.3%.” (AFP, Sept. 25)

French Economy Shrinks In Second Quarter. “The French economy shrunk by 0.3 percent in the second quarter of 2008, the government confirmed Friday as it prepared to present an annual budget against a background of world financial turmoil. The figures -- unchanged from the initial estimate -- came amid a raft of negative economic indicators showing a mounting budget deficit and sharply rising jobless figures… On Monday, Finance Minister Christine Lagarde had predicted the French economy would grow by only one percent this year, lower than previous government forecasts… President Nicolas Sarkozy: France is too involved in the world economy for us to think for one second it could be sheltered from the events currently rocking the world." (AFP, Sept. 26)

                       

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Comments

[helplessobs...:]

Judy,
Your facts are worth more than the opinions posted on this site. Keep up the good work!

2008 Sep 29 11:25 AM

[whidbey:]

This is just the start for most Western states, the interesting issue is what is happening in the Far East and South America. My sources are saying China is having its own banking problems with business loans, with manufacturing and export firms heading the list. Our Chinese suppliers are asking for cash on order, something new. Brazil seems to be having its own problems due to slacking petro sales internationally. One must suspect that this fall season is nothing new, but the open admissions are new and may grow. I suspect a new economy in the USA by the first of the year: a much chastened consumer and no growth.

2008 Sep 29 11:42 AM

[who:]

Losses due to stock price, failures and forced marriages. LEH is being felt by Hong Kong public who had invested in mini-bonds and financial companies taking losses on their investments in LEH and WM. Resulting in severe stock price drops of financial companies since people don't know how much local banks have invested in US/ European banks.

2008 Sep 29 12:24 PM

[specks:]

It's beginning to get really ugly out there if you need to borrow, are deep in debt, and have insufficient cash flow. On the other hand, if you have a good job, your debts are in line with your income, then you're wondering what all this stuff is about.
Oh for the time when I too was much more innocent than guilty!

2008 Sep 30 07:33 PM

[SA Editor J...:]

Thanks H.O.!
To 'Who'-- Got any tips on where I can find out more info on Hong Kong banks et al. I've found a little bit on the fallout from Lehman for Asian banks, but I'm not so familiar with Chinese sources and I suspect you are right about this being the tip of the iceberg for them.
Thanks,
Judy

2008 Oct 01 02:13 PM