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Debt-Averse Germans Unlikely to Attract Sub-Prime Trouble | Business | Deutsche Welle | 25.09.2008
Sub-prime mortgages are virtually unknown in Germany since home ownership rates are relatively low. Germans tend to be debt-averse and are required to put down more equity in financing a home purchase.

German politicians have criticized the US for failing to implement stringent controls on financial markets with many pointing out that the sub-prime mortgage crisis that felled Wall Street's venerable financial institutions week could not happen in Germany. They may have a point.

 

For one, experts say, the type of high risk lending practices that were exposed when the bubble burst in the US housing market a few years ago is more heavily regulated in Germany.

 

"The sub-prime market is virtually non-existent," said Elaine Kempson, director of the Personal Finance Research Centre at the University of Bristol.

by Fran on Thu Sep 25th, 2008 at 03:17:08 PM EST
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EU rules out US-style bailouts - EUobserver
"The situation we face here in Europe is less acute" than in the US, says the EU economy commissioner

EUOBSERVER / BRUSSELS - There may be need for stricter financial monitoring worldwide, but in Europe in particular, US-style bank bailouts are not necessary at this stage, EU officials told MEPs on Wednesday (24 September).

Recent events in the financial sector are hurting the economy, as they are "of a magnitude that exceeds anything we have seen in our lifetime," EU economy commissioner Joaquin Almunia said.

However, referring to the recent decision by the US to buy $700 billion (€476 billion) of bad debt from banks and other financial institutions, he stressed that "the situation we face here in Europe is less acute and member states do not at this point consider that a US-style plan is needed."

"We are talking about a US plan, adapted for circumstances in the United States, where, it should be recalled, the crisis originated and where the financial sector has been most severely affected," the commissioner pointed out.

by Fran on Thu Sep 25th, 2008 at 03:17:53 PM EST
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Dutch Finance Expert: 'Europe Should Establish A Rescue Fund' - SPIEGEL ONLINE - News - International

The credit crisis is not just an American problem. In Europe, too, banks could suddenly find themselves in trouble. Europe needs to find a way to handle this, argues ex-banker and finance professor Dolf van den Brink.

Dolf van den Brink is an experienced banker. He lived through the Latin American debt crisis, the currency crisis that hit the European Monetary Fund, the fall of the British pound in 1991, the Russian crisis of 1997 and the Asia flu in 1998. But he has never seen anything that compares with what is happening with the current financial markets crisis on Wall Street.

 "The last three weeks have been extraordinary," he says. "This is serious. We have been walking on the edge of a precipice."

Van den Brink, a former executive board member of Dutch multinational bank ABN Amro, is a professor of financial institutions at the University of Amsterdam. According to Van Brink, the European Union should establish a rescue fund for bad bank loans similar to the one being set up in the United States. This, he argues, would prevent big commercial banks in Europe from collapsing.

by Fran on Thu Sep 25th, 2008 at 03:28:23 PM EST
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