What about ...

Again heavy weather ahead for the European banking sector.

The influential American economist and professor Nouriel Roubini, the current financial crisis is predicted in 2005, wrote last week that the hope of the world on a swift economic recovery can be finally written off. "There is at best a long U-shaped recovery in the eurozone and Japan for so long can go take that can move in an L-shaped near-depression," said Roubini, who says that we should brace for a prolonged period of high unemployment, higher deficits, ever-further falling house prices and again major problems in banks.
According to Roubini, the artificial effects of the massive economic stimulus and bailouts are costly now in place, and the world economy still in a deep valley stream. Worse, the fundamental causes of the crisis, namely the excessive debts of both banks, households and governments, are not addressed. (1)

Growth slowed by necessary cuts
Countries that have spent too much structural-such as the U.S., Great Britain (where the national debt 'suddenly' appears to over € 4.7 trillion, nearly four times higher than has hitherto been conceded (2)), Spain, Greece and others-must now be cut back sharply, to consume less and less to import. Because countries that traditionally have saved China, Germany, Japan and emerging Asia-not going to spend more money to the budget cuts and therefore less spending on other countries to offset the global demand will therefore hardly attract and restore the world economy are weak.

Roubini said the latest figures show that the cautious growth is already slowing, and that this trend in the second half of 2010 will continue. For new incentive programs is no more money and therefore more and more countries will have to undertake significant cuts. Because the current growth is mainly based on investments of the governments and not the business risk a "Double Dip" or W-shaped recession. Even if this is avoided then the modern economies at best only a moderate and prolonged U-shaped recovery with confidence.

The economist thinks that especially Europe is facing a very difficult time. As a result of the massive cuts the growth in the eurozone at the end of 2010 almost zero. The scholarships will plummet and the cost to borrow money will be for both governments, banks and businesses will rise sharply. The result will be that the confidence of investors and consumers even further undermined. New bank crisis in Europe is coming According to the New York Times will still have a new banking crisis over it. The leading newspaper cites the European Central Bank, the Bank of England and the IMF, which recently warned of serious problems in European banks. They comprise increasingly difficult to raise capital needed for short-term loans within the next two years should be repaid or refinanced.

Because both the European banks and governments above many trillions of dollars they need to compete with each other, making the cost of new loans for business and consumers are likely to go up, which may have adverse consequences for economic growth. "We race on the verge of a tremendous precipice off," warned Richard Barwell, economist at Royal Bank of Scotland. "Nobody really seems to want to talk about, but it is of utmost importance." Worldwide, banks nearly $ 5 billion owed to bondholders and other lenders and money that now and 2012 to be coughed up.

Approximately $ 2.6 trillion is accounted for $ 1.3 billion for Europe and the U.S.. Analysts are particularly concerned about Europe, because the banking system in several European countries-Greece, Portugal, Spain, Romania, Hungary, Ireland, already under pressure because of the debt crisis. (3) Where the trillions for the banks and governments and will come from nobody knows. In addition the weakness of the euro might be good for the external balance and for the European export as Dutch politicians setting for us, but this effect is by Roubini more than offset by the damage to the growth and export prospects in the U.S., China and emerging Asia. For example, the Fed last week that the recovery of the U.S. economy was still five or six years can wait. The result was that the dollar fell sharply and the euro rose again correct. (4)

Also lower China growth bad news

Even in China signals are seeing a slowdown in economic growth. The almost zero growth in Western economies and the weaker euro, bringing the Chinese growth decelerated from 11% to 7% at the end of this year. That is bad news for the other mainly of export-dependent countries in the rest of Asia, and also for countries that traditionally sell raw materials to China and import many goods from China. This is especially detrimental to Japan, where the minimum is only achieved growth from exports to China. The scenario in which U.S. economic growth drops to 1.5%, the eurozone and Japan stagnate and the Chinese growth slowed to below 8% may not ensure a literal global economic contraction. Yet it will be felt as such, especially if the vicious circle of weak growth, lower prices, even weaker growth and even lower prices is not broken. It was finally making this spiral the world into recession ended in 2008.

In addition, according to Roubini is an Israeli attack on Iran still not be ruled out, something very likely that oil prices will greatly increase and the global recession will only worsen. Options exhausted, "a very difficult journey" as a result, the political, financial and economic policymakers have no more options. Even more monetary 'Quantitative Easing', the almost unlimited printing money-will be little difference. Money for additional economic incentives and a new round of bailouts of troubled banks, there is hardly any. Roubini calls the optimists hope for a quick recovery, therefore, 'a delusion'. Because no country is an island in itself and both Western and emerging economies are interdependent, the future looks bleak. "Prepare yourself wet, because there is a very difficult time."

Source: Xander News
(1) Project Syndicate
(2) The Independent

(3) The New York Times
(4) Telegraph Finance