Irish Times / Reuters
Germany, France announced banking rescues
Germany and France announced massive financial rescues today as governments across Europe stepped in to shield banks […] in the face of the worst financial crisis in nearly 80 years.
German Chancellor Angela Merkel presented a rescue package that will provide €400 billion ($543.4 billion) in bank guarantees and a further €100 billion in state funds to recapitalise banks.
French President Nicolas Sarkozy, who hosted a euro area summit with Britain yesterday which agreed on the coordinated action, said France would create two funding vehicles with up to €320 billion to guarantee bank lending and €40 billion to provide capital to banks in need.
The governments of Spain and Austria announced similar emergency measures to shore up their banks and stabilise their financial system, and Italy was preparing its own package.
[…] they promised coordinated rescue packages at the emergency summit in Paris yesterday.
Sweden, which is not in the euro zone, said it would introduce legislation soon to safeguard its financial system, but saw no need to inject capital in its banking sector.
Merkel said the financial crisis meant Europe’s biggest economy would not meet previous economic growth
She called for the International Monetary Fund to have a stronger role in overseeing the global financial system
British Prime Minister Gordon Brown, whose decisive action during the crisis has bolstered his political standing at home, called for world leaders to come together to remake the Bretton Woods agreement for a new globalised financial system.
Dollar, Euro, Sterling May Be Destroyed Zimbabwe-Style
Paul Joseph Watson
Private investment advisor Martin Hennecke warned this morning that the endless printing of money to bail out collapsing banks would lead to hyperinflation and the Zimbabwe-style destruction of the dollar, euro and sterling.
Asked by CNBC [watch here] how the three currencies could be destroyed, Hennecke, senior manager of private clients at Tyche, highlighted the collapse of Iceland’s banks.
“They have a lot of external debt in other currencies so they wouldn’t be able to print up more of their own currency – meaning hyperinflation to get out of their debt – but the UK, the U.S. and the rest of Europe could do it….this is the first step down the road to hyperinflation,” said Hennecke.
Noting that there was a gold rush and panic buying taking place while gold dealers worldwide had to close their doors, Hennecke agreed that gold prices would explode as hyperinflation crept up, and said that relatively modest overall price rises in the precious metal were partly a result of deleveraging as well as, “manipulation as the central bankers and the politicians don’t want you to panic out of their debt and go into gold.”
Hennecke dismissed the new rescue plans announced over the weekend as merely new taxpayer funded money being printed up and thrown at the problem, which will lead to accelerated inflation.
Asked if he believed whether the Euro and the U.S. dollar could go the way of the Zimbabwean dollar, which has suffered annual inflation of over 200 million per cent over the last few years, Hennecke responded, “Actually it’s interesting to know that the world’s leading standard rating agency Standard and Poor has predicted that all the major western governments are heading towards default on their sovereign bonds – that was predicted way before the crisis even started and now with tax revenues drying up and much much more money needed for these bailouts and privatizations of the banks to prevent a bank run, clearly that is likely to be happening earlier (rather) than later.”
“Most investors are saying cash is the safest thing but it might just turn around with cash being one of the highest risk investments if this inflation accelerates,” Hennecke concluded.
Early last month, before the collapse of Lehman Brothers and the announcement of the $700 billion bailout package, Hennecke warned that the U.S. and Europe were both heading for depression and that the U.S. would eventually be forced to announce national bankruptcy.