Monday, October 06, 2008

Asian markets fall hard, Europe drops 4% at opening

Asian Markets fell due to fears in the banking sector and of the overall global economy after the US experienced it's worst week in seven years. Asian investors said they are skeptical of the $850-billion bailout plan passed by Washington on Friday and are concerned about a U.S. jobs report that suggested the U.S. could be headed for a recession. They said they wonder about the impact of the package and how long it will take to thaw credit markets, restore bank lending and provide stability to the U.S. economy.

In Europe the German financial corporation Hypo Real Estate still requires urgent financial assistance. The international property lender Hypo Real Estate is fighting for its life after German banks and insurers pulled out of a multi-billion pound state-led rescue plan after fresh financing shortfalls emerged this weekend.

A number of governments across Europe have started to guarantee all savings and not just the limited portions as they have done in the past. Ireland started the trend of 100% guarantee and that has since been copied by Greece, Germany and late last night, Denmark. In an effort to prevent runs on the bank and money shifting from an unprotected to a fully protected banking country, other countries will surely follow soon.

Europen heads of state have come together as more financial problems appear in their banking system. They have attempted to build a US-like rescue package but so far have been unable to agree on a coordinated plan. The individual bank guarantees by specific countries only highlights the banking problems and at its opening, European Markets have fallen over 4%.

This is going to be the first real test of both the euro and the European Central Bank (ECB, which is the equivilent to the US Fed) as the Eurozone economies head into recession.

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