Next Wave of Banking Crisis to come from Eastern Europe

European banks face an entirely new wave of losses in coming months not yet calculated in any government bank rescue aid to date. Unlike the losses of US banks which derive initially from their exposures to low-quality sub-prime real estate and other securitized lending, the problems of western European banks, most especially in Austria, Sweden and perhaps Switzerland arise from the massive volumes of loans they made during the 2002-2007 period of extreme low international interest rates to clients in eastern European countries.

Roots of the Banking Crisis

Whenever you try to solve a problem you should look at what caused the problem in the first place. In early 2009, the banking system is wrestling with hundreds of billions (if not trillions) of dollars of bad assets, known as subprime loans, marginal loans, or other vague descriptors.

MSM: Senior HBOS executive ‘sacked for warning of banking crisis’

Paul Moore, a senior executive at HBOS, was sacked by one of Gordon Brown’s favoured bankers after warning his bosses they were taking excessive risks, MPs were told.

MSM: Bank crisis reignites as US giants post massive losses

Bank of America needs $20bn bailout while Citigroup forced to unveil break-up. Barclays Bank shares plummet 25 per cent as turmoil spreads to Europe

The Worst Is Not Behind Us – Beware of those who say we’ve hit the bottom.

It is useful, at this juncture, to stand back and survey the economic landscape -both as it is now, and as it has been in recent months. So here is a summary of many of the points that I have made for the last few months on the outlook for the U.S. and global economy, as well as for financial markets:
-The U.S. will experience its most severe recession since World War II, much worse and longer and deeper than even the 1974-1975 and 1980-1982 recessions. The recession will continue until at least the end of 2009 for a cumulative gross domestic product drop of over 4%; the unemployment rate will likely reach 9%. The U.S. consumer is shopped-out, saving less and debt-burdened: This will be the worst consumer recession in decades.

MSM: Nature loss ‘dwarfs bank crisis’

Losses are great, and continuous, says the report

The global economy is losing more money from the disappearance of forests than through the current banking crisis, according to an EU-commissioned study.

It puts the annual cost of forest loss at between $2 trillion and $5 trillion.

The figure comes from adding the value of the various services that forests perform, such as providing clean water and absorbing carbon dioxide.