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Stock exchanges in panic tendency

by Ralf stretch 17.08.2007

Several-day-long appeasement feign normality but new negative data of the US property market provide now for panic at the stock exchanges

Was the “worst bank crisis since 1931” prevented by the intervention of supervisisors and credit and finance industry, Jochen Sanio maintains, president of the Federal Institution for supervision of financial service(BaFin)?




Chart of NIKKEI and Dow and

Sanio is on vacation to Canada, but after days of the appeasement formulas at the stock markets on Thursday panic broke out, when again negative data of the bursting US real estate blister came in. The courses fell. The trend is not broken, today lost the Nikkei index in Tokyo even around 5,42 per cent. Brussels determines now against Rating agencies, because of the dangers would not have warned.

It was enough that a little more badly than expects new numbers from the USA failed, in order to bring the financial markets to panic reactions. One may ask oneself, which numbers had actually expected the financial jugglers. Because of the bursting real estate blister in the USA the number of the new projects was reduced again in July by 6,1 per cent. That concerned single family houses to 7.3 per cent and to 1.6 per cent of multi-family houses. In the comparison between years the decrease constitutes already 21 per cent (42 per cent of the highest level in January 2006). These numbers show, which effects come to the entire US economy.

There would be still much too many houses and dwellings on the market, why the prices will continue to fall, says now the analysts. These adjustments with the prices, which become higher unemployment in the building sector and other consequences to the fact to lead that ever more dwellings on the market are washed, because the credits cannot be served any longer (at the American Subprime mortgage market a disaster threatens). In addition come the crumbling inclination to the consumption and the more restrictive granting of credit, which new crises on the financial markets will provoke. Ever putrid credits more banks will have to copy.

Thus it does not surprise, if the US-Immobilienfinanzierer Fannie Maeon a further aggravation of the US US crisisUS crisis counts. The purge of the real estate prices led to a rise of the credit losses, communicated the company, which is partially in state hand. In this year the past historical highest level can be achieved and the credit losses could in the coming year even still further increase. With many debtors 2008 are a rise of the loan rates planned, so that in the coming year on “clear credit losses” is to be counted, said their Chief Risk Officer Enrico Dallavecchia for 2007 and.

Further large real estate companies come into the inability to pay. Straight one stopped the large US US mediatorUS mediator roofridge Magnus corporation its business. No more new credits will assign, explained the enterprise to its customers. After reports also this company will introduce an insolvency procedure. The society has the majority of its 5,000 coworkers to dismiss.

Reflexes of the uncertainty

Instead of the end of the crisis, as some it wants to talk us we see so far only the point of the iceberg and long are clear that the crisis left the range of the badly secured credits on the Subprime market. At present only one is clear: We do not know, what still comes, because still no clear information about it is present, like strongly also European banks into the credit market of the USA is complicated (Immobiliencrash on European agenda). If they should have to copy still higher values, than so far accepted, their losses fail clearly more highly, thereby would already develop a threatening situation. House-made problems are here still completely excluded.

The swearing to formulas, the economic situation is stably, why the crisis will not pierce, received anyway already absorber. Thus one speaks with Goldman Sachs now already of the fact that the economics is” than expected “somewhat more weakly. The magic word of a recession dips now ever more frequently than fright ghost in reports on (a recession comes in the USA?).

Actually the reactions of the financial markets are only reflexes of the uncertainties. The fact that the stock exchange went into Tokyo on Friday on rapid driving downhill and lost even 5.42 per cent, has to do with the fact that it was the real estate blister in Japan, which 1991 the economics forced into the knees. Therefore the sharp fall in prices in Tokyo failed even still more strongly than after the notices on the World trade center and the Pentagon on 11 September 2001. Many banks could be protected at that time only with national assistance the collapse. In Japan one is particularly sensitive burned child and therefore. It was similar in London, where the courses fell by 4,1 per cent, there already loses the blister since more than one year slow at pressure.

Strongly it met also the stock exchange in Madrid, where the courses with 3,7 per cent fell more strongly than after the notices in March 2004 in the Spanish capital, which has to do particularly with house-made problems. Because so far only one bank is well-known, those by the US crisis is affected and only with schlappen 270 million euro. But is called nothing, further and more well-known name with higher writing-off sums will emerge, because masking in Spain has method. As names the Santander bank and BBVA emerges again and again .

Even if the banks had everything in dry cloths, as they so far constantly state, nevertheless all that in Spain likewise a real estate blister blew itself up dangerously , know into which them are strongly involved. The blow-out of this blister is also by large quantities of black money, which flowed here into real estates for washing to stop no more.

The record fraud on Sparern in the past year besides showed, how badly the financial system is controlled and secured. Spain besides undertook nothing, in order to steer preventively the foreseeable crisis against. The banks were animated to ever more absurd credit forms, in order to save the blow-out of the blister until the parliamentary elections in the coming spring over there (are to blame for on lifetime in Spain).

Accordingly smaller the losses at the stock exchanges in Paris and Milan (3.3%) and Frankfurt with 2,4% failed, where the dangers of own bursting real estate blisters are smaller in each case. In the violent reactions of the stock exchanges also the substantial interventions of the US issuing bank could not change anything, which shot on Thursday again 17 billion US Dollar on the market. Altogether the FED pumped in the meantime 88 billion dollar to the market. Surprisingly the issuing bank lowered now today the rate of discount around a half per cent point to 5,75 per cent, in order to create liquidity at short notice. It leaves the central interest rate for daily allowance unchanged with 5,25 per cent, confesses now against past expressions Ernst of the situation. The situation at the financial markets worsened and the risks for the economic growth clearly increased, justified it the step. So far the FED had explained not to want to lower the interest in order to weaken the crisis. That will only happen if it came to a real danger for growth. That is now the case.

In the meantime the international Rating agencies come into the view of the investigators in Brussels. Those are to actually evaluate the credit-worthiness of enterprises and states. European Union domestic market commissioner Charlie McCreevy lets examine, whether they warned too late of the risks in the US US businessUS business, communicated a spokeswoman von McCreevy. Until April 2008 is is examined whether the agencies would have reacted appropriately fast to the crisis at the US mortgage market. Legal measures are not impossible any longer, were called it from Brussels.

from german article http://www.heise.de/tp/r4/artikel/25/25985/1.html

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