- The New York Times reports :
THE real estate market in Manhattan has become so unnerving to buyers that some are forfeiting six-figure deposits rather than close on deals they have made.
At 304 Spring Street, a sleek condominium building in Soho with stunning Hudson River views, the buyer for the duplex penthouse recently decided he would not go through with the deal and walked away from a $780,000 deposit.
At 1120 Park Avenue, a classic prewar co-op filled with multimillion-dollar apartments, it appears that a buyer forfeited a deposit of as much as $1.1 million.
Real estate agents representing buyers of at least three other multimillion-dollar properties also report clients who knowingly left deposits of more than $1 million or hundreds of thousands of dollars on the table.
In each case, the buyers had signed their contracts before the financial meltdown last fall, but decided in recent months that because values in the luxury real estate market have dropped 20 to 40 percent, it no longer made sense to go through with their deals.
Sam Chandan, the president of Real Estate Economics, a research company in New York, said the fact that people were forfeiting such large deposits was “indicative of the degree of uncertainty in the market.”
Given how difficult it has become in recent months to get a mortgage, he said, even buyers at the high end may be concerned about getting financing to complete their deals.
And because the volume of sales has dropped to a trickle in the luxury market, “there are so few comps that it’s hard to even know what a property is worth,” he said, referring to comparable-sales data. “That uncertainty undermines people’s sense of what the actual value might be, so they’re taking actions designed to limit their exposure.”
In some cases, agents say, buyers who signed contracts before the market started to fall have managed to renegotiate the sales prices to reflect the current market more accurately.
Frederick W. Peters, the president of Warburg Realty, said his agency had had two multimillion-dollar deals in which buyers had forfeited six-figure deposits. “In both cases,” he explained, “the buyers felt that any renegotiation wasn’t going to satisfy them and they preferred to remove themselves from the market for a while.”
Their decisions, he added, were “driven by the fact it’s a new world and they were not sure what they wanted to do with their resources in the face of that.” When they re-enter the market, Mr. Peters said, they will very likely be able to buy similar properties at prices low enough “that they will still have saved money, even after walking away from their deposits.”
- This is 1 for the record books! How scared are you when you walk away from a 6 figure amount ? Very very very scared! Why not just hold it for the long run? Wealthy buyers should not have any problems hanging on right? Unless they expect it to go alot alot lower!
- Can there be any doubt that we are in the 21st Century Great Depression? Even the MSM has come around to admitting it. Moody’s predicts default rate will exceed peaks hit in Great Depression :
A bigger proportion of non-investment grade companies will go bust in the US and overseas in the coming years than during the Great Depression, according to Moody’s, one of the world’s foremost experts on credit.
In what will be seen by many as die-cast confirmation that the world economy is plummeting towards an economic and corporate implosion of unprecedented proportions, Moody’s said it anticipated a tidal wave of defaults was approaching.
It said that in the coming months more than 15pc of speculative-grade bonds and loans – all but the most highly-rated – would default on their debts.
This peak is even higher than the peak reached in 1933, when bank after bank throughout America was collapsing, taking hoards of other companies with them. Back then, the default rate peaked at 15.4pc; moreover these companies were former investment grade issuers regarded as more reliable credit prospects than their contemporary counterparts.
Kenneth Emery, senior vice president at Moody’s said: “The three main drivers of the forecasting model are forecasts for the high-yield bond spread and the unemployment rate, along with the current level of issuer ratings. In the fourth quarter, the high yield bond spread reached unprecedented levels; and we’ve got an unemployment forecast approaching 9pc this year and issuer ratings at record low levels.
“We certainly think that this credit cycle will be worse than the last two in the early 1990s and 2000s. In fact, in 2009 we expect to see the largest number of defaults since the advent of high yield bond market in the early 1980s. And the default rate for non-investment grade bonds may reach levels even higher than those registered during the Great Depression.
“There are risks here because we are in unchartered territory, but the model forecast is that roughly 15pc of our speculative-grade issuers globally will default in 2009. In Europe the forecast default rate is even higher at close to 19pc.”
The report traced the health of the bond market all the way back to the 1920s, and finds that the threat of companies defaulting is more stark now than at any point in that stretch of time. It predicted that company defaults will triple this year to about 300, after 101 defaulted last year on more than $280bn of debt.
If the economy deteriorates by even more than expected, the default rate could conceivably mount to around 20pc, Moody’s added – meaning around one in five of all non-investment grade issuers default, something which has never happened before. The companies most at risk of default are consumer transport groups, which largely constitute airlines, media companies and car manufacturers.
- All these ‘wonderful’ rating agencies, that rated sub prime loans as ‘AAA’, are now openly admitting the direness of this depression. No more spin and “let us be positive!”. This is a sign that the world is getting very very close to a cataclysmic collapse! Anyone who denies it at such a late stage will look like a fool ! They will lose credibility.
- This will be worse than the 1929 Great Depression. 1 in 3 companies will go bust! 1 in 4 people will be unemployed. Maybe even a 30% unemployment rate. We just need to look at the real economic statistics and not just those massaged by governments.
- Those who do not learn from history are bound to repeat it. The Great Depression of 1929 led to World War 2. Is the world headed towards another World War? Quite a few historians and economists say that the world really got out of the Great Depression when World War 2 started.
- Dr. Frederic F. Clairmont writes in Is A Major War A Possibility In 2009? The Historical Antecedents :
Some of you have evoked the possibility of a world conflict in the course of 2009.. I shan’t say that this prediction is far-fetched; or remote. Doubtless, many of you do not mean a regional conflict as in Ossetia and Gaza . Nor do I exclude the possibility of the US / Israel on Iran . In the making of war, madness can never be excluded. Let us keep in mind that the US caste oligarchy (USCO) and its trillion dollar militarist appendage is at war on several front in areas engulfing tens of thousands of kilometers: It is pursuing a war in Gaza via its surrogate; it is pursuing a war in Iraq; and of course it is escalating its military drive in Afghanistan; it has extended its killing fields to Pakistan. Recall that Pakistan has a frontier of 2,500 kms with Afghanistan .
The USCO and its military lackeys has been at war since 1945 non- stop. And that includes its role in the Chinese Civil War that ended in 1949, in Indochina since 1945, in Korea , in Iraq twice over.etc. Its colonial wars fought exclusively against peoples of colour have driven the US economy into a state of bankruptcy.
At the latest count, it has 250 military bases outside the United States . It is spending more than it earns. It is the world’s biggest mendicant. It is spending other people’s borrowed money. In Iraq alone, according to the figures of Stiglitz, the number is $3.5 trillion and the wars are not yet over. In these wars it has slaughtered millions. It is fighting wars in Iraq , Afghanistan , Pakistan and Israel ’s attack against Gaza , as in Lebanon , was inconceivable without US support. This is a banality. Let me say that the phosphor bombs used in Gaza were made in Virginia . The uranium enriched artillery shells were manufactured in Tennessee . The bombers were F-18’s of American fabrication. Gaza was one more testing ground for its weapons of mass slaughter. That makes four wars. Some are right to stress that wars, preparations of wars, boosts output and employment. What matters here is the nature of the output and its related employment impact. It is unproductive and does not add to productive capacity.
This was certainly the case of Hitler’s Third Reich in which arms outlays provided a booster that eliminated the ranks of the jobless. And of course the jobless could always find jobs in the Wehrmacht subsequently transformed into cannon fodder. This was true of the U K from 1937 onwards. As you recognize the changes wrought by FDR’s New Deal , admirable but illusory in several ways, did not curtail the Great Depression. What did the job was massive public sector war expenditures bankrolled by debt.
Let me repeat that what ended that satanic slump triggered in 29 was the advent of World War 2. Can it therefore be suggested that war and preparations for war offers a ‘final solution’ for achieving full employment?
- The trigger for a 3rd World War is any bodys’ guess. Could US-Israel start a war with Iran that leads to it? The soon to be Prime Minister of Israel: Binyamin Netanyahu is intent on attacking Iran :
We know who the Netanyahu/Lieberman duo is . There is nothing nebulous in their blueprint. “My highest priority” Netanyahu thunders “is Iran ”. Need we say more? Has Obama plumbed the meaning of that statement? There is nothing cryptic about it. The duo’s unrivaled standing in the Zionist lobbies and in the dominant spheres of the USCO the US is high. Hence we cannot ignore the possibility that in their desperation they could trigger a wider war. Such a course could not be confined to the region.
The goal of US imperialism, conflated with that of Israel , is the destruction of Iran , the ally of both Hamas and Hezbollah. This is not speculation. It is stated policy. The Iranian prime minister has pushed his pawns. The game has started. The launching of their satellite into space injects into our calculations new and terrible variables.
- What is not often considered is a potential conflict between US and China. Dr Clairmont again :
China and the US
Before I proceed, however, to examine whether mounting trade and payment tensions could lead to a deadly military confrontation we should remind ourselves of the nature of the trade rivalries and weapons deployed in those economic wars in the thirties. The speech of the Chinese president lambasting the United in Davos , as did Putin, is indicative of the drift of economic war. Davos is the pivot of globalization. It is the cockpit of corporate power, of world leaders and aspiring leaders. Davos underlined the penurious fragility of financial institutions once regarded as the bedrock of the system.
Words as stability and confidence have been wiped out from their slate. The debacle of UBS and of The City and the ongoing tremors in Wall Street , matched by such spectacular swindlers as Madoff and Stanford The anger can no longer be dissimulated nor more than it can be concealed in the mass labour demonstrations in Paris and all French cities and in the neo-colony of Guadeloupe. The tensions are mounting. They go beyond beggar-my-neighbour policies first created by Joan Robinson of Cambridge University in the thirties’.
No where was the nature of these conflicts more clearly delineated than by Sir Percy Bates, chairman of the Cunard Steamship Company (April 1935) at a moment when the Great Depression raged. Its relevance to our times is all too obvious:
“We are going through a war…The arms that are being employed are not battleships, armies, aircraft, but tariffs, quotas and currencies. No international monetary standard is recognized, and every time that a tariff, quota or a currency varies, one is confronted with a manoeuvre, a hostile manoeuvre, a war manoeuvre. The worst of all is the reluctance to admit officially the existence of a state of war.”
- Putin and the Chinese president have openly lambasted the US in Davos Switzerland. It is clear the USD hegemony of the past 60+ years is breaking apart. What is not apparent to many is the fact that since July 2008 the economic collapse and the strength of the USD is causing the collapse of many Eastern European countries. There is an economic war going on. Eastern Europe will soon be ‘conquered’ by Western Europe.
- This escalating worldwide economic collapse will result in conquest of many smaller countries/nations. They may appear to stand alone after this crisis. But they will be greatly indebted to the central banking cartel that rules the western world. This shadow government/power is the real ruler behind the western world. It controls political parties via its control of money and the economy.
- Every day throughout the world, we hear of more unrest, riots, violent protests …. Michael Klare (professor of peace and world security studies at Hampshire College and the author of “Resource Wars,” “Blood and Oil,” and “Rising Powers, Shrinking Planet: The New Geopolitics of Energy.” ) writes in We’re on the brink of disaster :
Violent protests and riots are breaking out everywhere as economies collapse and governments fail. War is bound to follow.
The global economic meltdown has already caused bank failures, bankruptcies, plant closings and foreclosures and will, in the coming year, leave many tens of millions unemployed across the planet. But another perilous consequence of the crash of 2008 has only recently made its appearance: increased civil unrest and ethnic strife. Someday, perhaps, war may follow.
As people lose confidence in the ability of markets and governments to solve the global crisis, they are likely to erupt into violent protests or to assault others they deem responsible for their plight, including government officials, plant managers, landlords, immigrants and ethnic minorities. (The list could, in the future, prove long and unnerving.) If the present economic disaster turns into what President Obama has referred to as a “lost decade,” the result could be a global landscape filled with economically fueled upheavals.
Indeed, if you want to be grimly impressed, hang a world map on your wall and start inserting red pins where violent episodes have already occurred. Athens (Greece), Longnan (China), Port-au-Prince (Haiti), Riga (Latvia), Santa Cruz (Bolivia), Sofia (Bulgaria), Vilnius (Lithuania) and Vladivostok (Russia) would be a start. Many other cities from Reykjavik, Paris, Rome and Zaragoza to Moscow and Dublin have witnessed huge protests over rising unemployment and falling wages that remained orderly thanks in part to the presence of vast numbers of riot police. If you inserted orange pins at these locations — none as yet in the United States — your map would already look aflame with activity. And if you’re a gambling man or woman, it’s a safe bet that this map will soon be far better populated with red and orange pins.
…… Blair did not specify which countries he had in mind when he spoke of “regime-threatening instability” — a new term in the American intelligence lexicon, at least when associated with economic crises — but it is clear from his testimony that U.S. officials are closely watching dozens of shaky nations in Africa, the Middle East, Latin America and Central Asia.
Now go back to that map on your wall with all those red and orange pins in it and proceed to color in appropriate countries in various shades of red and orange to indicate recent striking declines in gross national product and rises in unemployment rates. Without 16 intelligence agencies under you, you’ll still have a pretty good idea of the places that Blair and his associates are eyeing in terms of instability as the future darkens on a planet at the brink.
- The world is heading towards tremulous times: War and Rumors of Wars. If you study the period in between the 2 World Wars, you know that we have entered a similar period. The risk of a major World War is significant. We have madmen like Netanyahu/Lieberman and the war hawks in America to thank for this. The Satanic Cabal seems intent on starting World War 3 in the near future. Let us hope for the best but prepare for the worse. Never ignore the lessons of history. You may not live long enough to tell your children about the great events we will all be living through.
- See also :
Gerald Celente – Israel War to Ignite Terror, Threaten Global Economy and possibly Spark World War III
- Obama administration seems to be attacking the 2nd Amendment right of Americans to bear arms !
- I am not a fan of guns. But the federal government has increasingly attacked the constitutional rights of Americans, spying on citizens illegally, lying to get Americans to go to war…. Is the Feds planning for martial law? It will be easier to control citizens and oppress them if they don’t have guns! Do they plan to institute the military draft? When all your sons are serving in the military, who is going to defend their families? I do not trust the US government. They are becoming more and more fascist! Am I paranoid? Maybe?! But see also :
21 States Declare Sovereignty – Rise of Secessionist Movement !
Indiana Legislators Urge Feds to Cease and Desist !
Battle Brewing Between US States & Federal Government!
- Demand for gold is rocketing. Many people are so worried about the financial and economic health of the world that they are rushing to gold. Worried Investors Want Gold on Hand :
Worried Investors Want Gold on Hand Some investors are so worried about the prospect of economic collapse that they are buying gold and having it delivered to them, rather than holding the precious metal in the form of futures contracts or other securities.
The global recession and worries about the stability of the financial system have sent the price of gold to $1,000 an ounce. But more surprising is that buyers are taking the unusual and expensive step of taking possession of it.
“We’re having some of our strongest months ever,” said Scott Thomas, president and chief executive of American Precious Metals Exchange, a precious-metals dealer in Edmond, Okla. “The bottom line is our numbers are probably double what they were last year, and last year was very busy.”
Bob Coleman, who runs a bullion fund out of Nampa, Idaho, has taken multiple deliveries of gold and silver since last fall for his clients. The fund, Dollars and Sense Growth Fund, primarily invests in precious metals for high-net-worth individuals.
“It’s more of a trust issue,” says Mr. Coleman. “Given all the turmoil in the market, people prefer to have access to the metal.” Sales of American Eagle gold bullion coins at the U.S. Mint in Philadelphia more than doubled in the first two months of this year.
Investors are also flocking to gold coins. At the U.S. Mint, a total of 147,500 ounces of American Eagle gold bullion coins were sold in the first two months this year, a surge of 176% from the same period last year.
Demand is rising at the Comex, the metals division of the New York Mercantile Exchange, where investors increasingly are choosing to take physical delivery of gold, rather than cash, once their futures contacts expire.
Rising delivery orders have kept Brink’s Inc., a major carrier for the Comex, busy. The Richmond, Va., company said it saw a large spike in clients shipping gold and silver from the exchange over the past few months.
Tony Klancic, an account executive at Lind-Waldock, a Chicago commodities brokerage, says he has been taking calls since September from individual investors wanting to buy physical gold.
These are “real people in rural America with money under the mattress, and wealthy individuals coming to the futures market strictly intending to take delivery,” Mr. Klancic said.
In December, 4.5% of gold contracts ended in delivery, compared with 3.4% a year earlier, according to the exchange. Investors also are taking delivery of silver, with contracts ending in delivery rising to 7.3% from 4.7%. December is typically a big month for deliveries, and in January, deliveries remained higher than the year before.
Jewelers and other users of metals are among the buyers who take possession of gold and silver. But with sales of jewelry down and other industrial users cutting back, it appears that investors are causing the increase.
Gold deliveries peaked at more than 8% in the early 1980s, when Mexico defaulted on its foreign debt and the world economy was in recession. Deliveries dropped and have gradually fallen back to the range of 2% in recent years.
Gold pierced the $1,000 level last Friday, the first time since March 2008. On Tuesday, the February contract closed at $969.10 per troy ounce. So far this year, the precious metal is up 9.7%.
- With the world heading towards zero interest rate policy (ZIRP), gold is looking more and more like the real deal. Keep in mind that western governments have indicated they will move towards Quantitative Easing and Monetization of Debt. This is simply printing money out of thin air. Will there be a monetary collapse this year?
- Financial Times reports Gold coin shortage as demand soars :
The rush by retail investors into bullion coins is creating shortages as mints across the world struggle to meet the surge in demand, dealers and mint officials say.
The scarcity is lifting coin premiums to as much as 5 per cent above the spot gold price, a level reached briefly after the collapse of Lehman Brothers last September, when coin shortages also surfaced.
- Although gold price has come off their high last week of US$ 1000/ounce, this is just a normal correction in a bull run. Some say that this bull run still has 2 more years to go. The correction should be over by early next week and the price will breach US$1000/ounce easily. It will exceed the previous high of US$1035/ounce in March. How high? US$1250/ounce is not out of the question. If the Chinese come in and start to buy aggressively to build their gold reserves, how high it will go is any-body’s guess. The Chinese have indicated they will buy 4000 tons of physical gold to boost their reserves ie spend their US$2 T reserves to buy gold.
- See also :
Gold About to SkyRocket ! China Worries about Treasuries and Diversify into Gold !
Gold Price Set to Soar !
What’s not to Like about Gold ?
Dollar Devaluation, Debt Default & Gold
Massive US Dollar Devaluation Against Gold During 2009
Gold Rush Worldwide!
Obama, Roosevelt, Gold Confiscation and Dollar Devaluation
- Bill Maher in his acerbic wit best! Half in jest of course. See also:
Dana Carvey – Brokaw, McCain & Obama Impressions! (Humor)
Wanda Sykes on Government Bailout (Humor)
Wanda Sykes on Politics & Sarah Palin (Humor)
David Letterman on Economic Stimulus Package (Humor)
- The news keep getting worse for Eastern Europe. Hungary is about to go bust ! The question is how many western European banks are affected?
- The Telegraph UK reports :
Hungary is teetering on the edge of bankruptcy with its citizens struggling to pay off mortages and personal loans taken out in foreign currency during one of the post-Communist era’s most exuberant booms.
The birthplace of the Rubik’s Cube has provided its government with a multi-sided financial crisis that defies any ingenious solution.
The forint currency has plummeted and unemployment has ballooned, creating a voracious debt trap that is sucking down banks backed by Western taxpayers, particularly those of Switzerland and Austria.
Laslo Gulyas, a Budapest barman, is one of the lucky few who can still meet his repayments. “In times of trouble people need to keep drinking,” he bleakly noted at the counter of a handsome pub in Habsburg-era building.
“But it is sure now that many people with mortgages that were taken because they were cheaper than local loans, have lost their jobs and can’t generate the money to make the repayments.”
For almost a decade Hungary binged on cheap foreign loans taken out in Swiss francs and euros. It was a regional trendsetter. Foreign banks targetted the newly liberated central and eastern European states hoping to expand rapidly in new markets.
“People’s desire for wealth was not bound by the forint,” said Laslo Czirjak, a Budapest fund manager. “They borrowed in Swiss francs, euros and, even for a time, Japanese yen was available – it was just nuts.”
When forint interest rates proved stubbornly high, lower rate loans in Swiss francs and euros offered extra purchasing power. Statistics show that more that 60 per cent of Hungarian mortgages and car loans are denominated in foreign currencies. In one retropectively frenzied month – October 2007 – foreign currency loans represented 93 per cent of all lending.
Hundreds of debtors in default have turned to a volunteer organisation, the Association of Bank Loan Victims, for advice on saving their homes from repossession.
Rakitouszki Istvan, a builder, has not been paid for a year and lost his job in August. Last month the bank sold off his flat to a businessman who now wants to evict Mr Istvan and his family.
“I bought my flat for stability in life and for my kids to inherit that,” he said. “I had no idea I was going to get laid-off. I thought as long as I could work I was alright but it’s dreadful. There’s no investment in construction. I’ve been all over the place and there’s nothing.”
Despite losing his property, Mr Istvan remains liable for the entire loan and if he cannot repay, his children would be held liable for the debt. Mariann Lenard, a lawyer who runs the Association, said the law puts mortgage holders at the mercy of the lenders. “For a long time the ordinary man in the street is going to be involved in an unequal struggle with the banks.”
It is not just individuals that are prey to the downturn. Hungary is experiencing its gravest crisis since 1946 when it suffered history’s worst bout of hyper-inflation. Today’s battered forint was introduced then to replace the pengo, which was destroyed after the government tried to wipe out a Second World War debt overhang. ….
“There was a large bubble of consumption based on household debt,” said Janos Samu, an economist with Concorde Securities. “But now the exporters can’t gain on the collapse in the forint. It’s having a double impact on the economy.”
The Hungarian government is attempting to guarantee the mortgage payments of everyone who loses a job in the crisis but it is already in receipt of IMF assistance and the pledge will mean more cuts in general expediture. International help has been sought. Switzerland has promised to provide all the Swiss francs the Hungarian government needs to meet repayment demands. Austria is demanding the EU to establish a 150 billion euro (£134 billion) fund to bail out East and Central Europe.
Hungarians have become aware that the fall out from their folly will stretch far from the Danube’s banks. “What’s happening here means that all of Europe is going to suffer because you can’t have one country drop out of its element without affecting all the continent,” said Mr Gulyas.
- See also :
Eastern Europe Collapsing !
European Monetary System At Breaking Point ! Eastern Europe Bad Debts set to Bankrupt European Banks!
Eastern Europe Contagion Fear ! Ukraine Crumbling !
Next Wave of Banking Crisis to come from Eastern Europe
Eastern Europe Economic Collapse & Looming Debt Defaults
- Senator Ron Paul telling the Truth! The Illuminati central bankers who rule the world are the cause of our problems. The time has come to end the Federal Reserve! See also :
The Federal Reserve: Secretive And Incompetent Organization ! The Creature From Jekyll Island.
History of Money & Fractional Reserve Banking System
How International Bankers Gained Control of America!
Federal Reserve is a Private Company.
- We are in the midst of a worldwide economic collapse! This is not a recession. When you see exports plunging 45.7%, it means the economic engine is having a heart attack and is dying. This depression will be much worse than the 1st Great Depression.
- Bloomberg reports Japan’s Recession May Deepen After Exports Drop Record 45.7% :
Feb. 26 (Bloomberg) — Japan faces its worst postwar recession as the collapse in consumer spending abroad pummels the country’s exports.
Shipments from Asia’s largest economy will contract further this year, analysts predict, after plunging a record 45.7 percent in January from a year earlier. Last month’s slide, reported yesterday by the Finance Ministry in Tokyo, pushed the trade deficit to a record 952.6 billion yen ($9.9 billion). Sales to the U.S. alone fell 52.9 percent.
“We’re set up for a very, very deep contraction in first- quarter exports,” said David Hensley, director of global economic coordination at JPMorgan Chase & Co. in New York. “There’s no way you’re going to reverse this situation. The quarter’s pretty much already written as of January.”
Gross domestic product shrank at an annual pace of 12.7 percent last quarter and won’t do any better in the first three months of this year, Hensley estimates. The slump could force Prime Minister Taro Aso’s government, whose popularity has dwindled to less than 10 percent, to push for more fiscal stimulus. Meantime, factories are closing and workers are losing their jobs.
Japan became more reliant on exports for growth in the past decade, making the economy more vulnerable to the global recession. Manufacturers shipped 21 percent of their goods abroad in 2008, up from 16 percent in 1998, according to the central bank. ….
The Japanese economy’s contraction last quarter was the worst since the 1974 oil shock, and analysts predict the slump will drag into next fiscal year. Output may shrink a record 4 percent in the year starting April 1, according to economists surveyed.
Japan’s shipments to Europe slid 47.4 percent in January from a year earlier, the Finance Ministry said. Exports to China fell 45.1 percent and those to Asia dropped 46.7 percent. Imports fell 31.7 percent from a year earlier.
“Japan remains an economy that is very dependent on trade,” said Lewis Alexander, chief economist at Citigroup Inc. in New York. “The pace of the contraction of global trade is very extreme.”
- Looks really bad for Dubai. Will it end up as a ghost town like what Lindsey Williams said ? See also :
Dubai Real Estate Crash !
Cars Abandoned as Workers Flee Dubai As Economy Crashes
Dubai Real Estate Collapse
Lindsey Williams – Global Bankruptcies and One World Government
- Eastern Europe is the too hot to handle potato now. We are very close to a cataclysmic event. Simon Tisdall writes in Fiddling while eastern Europe burns :
As the financial crisis deepens, the EU’s indecision and failure to act threatens to shatter the vision of a united Europe.
If the EU has an answer to the intensifying financial firestorm in eastern Europe, it is keeping it to itself. But the longer member states fiddle about, the greater the risk of a pan-continental conflagration – and of lasting damage to the EU’s core aspiration for wider and deeper union.
A fractious meeting of foreign ministers in Brussels this week seemed to sum up all that is wrong and doesn’t work in the EU. Rather than urgently address massive Hungarian debt defaults, plunging Polish output, splintering Baltic coalitions, or Ukrainian street protests, they wasted time arguing over Slovenia’s arcane Adriatic fishing boat dispute with Croatia.
Richer west European states, led by Germany, fear eastern instability could further harm their struggling economies. Austrian bank lending in eastern Europe, for example, is equivalent to about 80% of Austria’s entire GDP. Eastern borrowers must repay $400bn in debt owed to western banks this year – or else everybody gets burned.
But worries about spreading contagion did not prevent “old Europe” holding up an EU commission plan to spend €5bn on energy and other infrastructure projects, part of a €200bn stimulus package that southern members like Spain and Greece say unfairly favours the east. The main concern of Gordon Brown’s Eurosceptic Britain, meanwhile, seems to be stopping its pocket being picked by recent arrivals.
Robert Zoellick, the president of the World Bank, says the EU should take the lead in rescuing eastern Europe. But the commission has reportedly already spent nearly half of its €25bn emergency fund on Hungary and Latvia. Much more will be needed. But wealthier EU governments have yet to cough up – while private capital is moving in the opposite direction as western banks reduce their exposure.
It’s far from clear who, other than the eager-to-please Japanese, will fund the EU’s weekend call, backed by the US, for a doubling of IMF rescue resources. Yet this gambit was itself evidence of political weakness – an indirect admission that Europe, where many new members (and two old ones, Britain and Denmark) have yet to adopt the euro, lacks union-wide financial institutions with the clout to deliver effective bail-outs. …..
The political ramifications of the EU’s indecision, if it continues, are many – but two main effects stand out. One is the prospective definitive ending of an eastwards enlargement policy already crippled by the Lisbon treaty stalemate.
Not just Serbia, held back in any case by its failure to arrest accused war criminal Ratko Mladic, but also Montenegro, Macedonia, other Balkan countries, and Turkey have all seen their EU membership chances recede sharply in recent months as Europe’s weaknesses, economic, political and institutional, have been cruelly exposed.
Other casualties may include Armenia, Azerbaijan, Georgia, Moldova, Belarus, and Ukraine, potential members of the EU’s new “eastern partnership” due to be launched in May. The scheme involves expanded free trade and economic and security cooperation, part of an ambitious nation and democracy-building programme.
- See also :
European Monetary System At Breaking Point ! Eastern Europe Bad Debts set to Bankrupt European Banks!
Eastern Europe Contagion Fear ! Ukraine Crumbling !
Next Wave of Banking Crisis to come from Eastern Europe
Eastern Europe Economic Collapse & Looming Debt Defaults