News / Economy

Europe's Financial Crisis Intensifies

The logo of Belgian-French financial services group Dexia is seen on their building in the business district of La Defense, near Paris, October 7, 2011.
The logo of Belgian-French financial services group Dexia is seen on their building in the business district of La Defense, near Paris, October 7, 2011.
Lisa Bryant

Europe's financial crisis has deepened this week as worries rose about the health of another bank - the Franco-Belgian-owned Dexia.  Dexia's board meets Saturday to discuss the bank's future. Dexia's woes underscore growing criticism about the region's handling of its crisis.

This is not the first time Dexia has been in trouble. French and German authorities bailed out the bank in 2008. Now it is on the financial brink again because of its high exposure to Greek debt.

Dexia is reportedly trying to sell its affiliate in Luxembourg. Its board meets Saturday, reportedly to discuss a larger breakup.  

French and Belgian authorities have vowed to take all necessary to help save Dexia and protect its clients, a promise echoed Thursday by Belgium's interim Prime Minister Yves Leterme.

Speaking on France's RTL radio, Leterme said the Belgian and French governments would do everything to ensure Dexia continues to function and to guarantee the bank's continuity.

Like many other European banks, Dexia passed a European stress test to assess its financial health. That was just three months ago.  

For Karel Lannoo, head of the Brussels-based Center for European Policy Studies, the new reports about Dexia's struggles highlight a bigger problem - European officials are not being transparent about the region's banking crisis.

"The authorities... want to cover it up. And apparently have not learned a lesson from the crisis; that if you cover it up, it gets even worse when it explodes," said Lannoo/ "We have seen similar periods in 2008, early 2009 with other banks, where authorities try to hide problems, but it is even worse when you see it. "

Dexia is not the only European bank that is struggling because of high exposure to the debts of Greece and other ailing European economies.

"Dexia could be the tip of the iceberg, probably the weakest of the banks which are around," said Lannoo. "But as soon as we have anther hit somewhere, the sovereign problems which Europe has today, these banks will be in trouble."

More broadly, analysts fear Europe as a whole may be tipping toward another recession. At his final news conference Thursday, outgoing European Central Bank chief Jean-Claude Trichet delivered a sober assessment.

"Ongoing tensions in financial markets and unfavorable effects on financing conditions are likely to dampen the pace of economic growth in the euro area in the second half of the year. The economic outlook remains subject to particularly high uncertainty and intensified downside risks," said Trichet.

Europe's debt and banking crises are certain to top the agenda when leaders of the Group of 20 meet in France next month. On Thursday, U.S. President Barack Obama again warned about the risk of a larger fallout.

"The problems Europe is having today could have a very real effect on our economy at a time when it is already fragile," said Obama.

Analyst Lannoo said Dexia's crisis also is notching up the alarm felt by many ordinary Europeans at a time of high unemployment and weakening economies.

"People will be even more concerned about the state of the financial system and even have less trust in the financial system," said Lannoo.

As a result, Lannoo predicts that Europeans may instead begin sinking their savings into real estate or other areas they feel are safer than their banking system.

You May Like

Republican Majority in Congress Off to Rough Start

Standoff over Homeland Security funding exposes philosophical, tactical problems within party More

Pakistan Blocks Baloch Activist from US Trip

Human Rights Commission of Pakistan slams Islamabad officials for stopping people from leaving country to attend human rights conference More

Video Muslims Long Thrived in North Carolina Before Students Killed

Idyll shattered February 10, when three Muslim university students living in Chapel Hill were gunned down by a neighbor More

This forum has been closed.
Comments
     
There are no comments in this forum. Be first and add one

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
Sierra Leone Ebola Orphans Face Another Crisisi
X
March 06, 2015 12:28 AM
There's growing concern about the future of an orphanage run by a British charity in Sierra Leone, after a staff member and his wife died this week from Ebola. The Saint George Foundation Orphanage in Freetown is now in quarantine, with more than 20 children and seven staff in lock-down. The BBC has agreed to share Ebola-related material with Voice of America because of the difficulties faced by media organizations reporting the crisis. Clive Myrie reports from Sierra Leone.
Video

Video Sierra Leone Ebola Orphans Face Another Crisis

There's growing concern about the future of an orphanage run by a British charity in Sierra Leone, after a staff member and his wife died this week from Ebola. The Saint George Foundation Orphanage in Freetown is now in quarantine, with more than 20 children and seven staff in lock-down. The BBC has agreed to share Ebola-related material with Voice of America because of the difficulties faced by media organizations reporting the crisis. Clive Myrie reports from Sierra Leone.
Video

Video Growing Concerns Over Whether Myanmar’s Next Elections Will Be Fair

Myanmar has scheduled national elections for November that are also expected to include a landmark referendum on the country's constitution. But there are growing concerns over whether the government is taking the necessary steps to prepare for a free and fair vote. VOA Correspondent Steve Herman was recently in Myanmar and files this report from our Southeast Asia bureau in Bangkok.
Video

Video Nigeria’s Ogonis Divided Over Resuming Oil Production

More than two decades ago, Nigeria’s Ogoni people forced Shell oil company to cease drilling on their land, saying it was polluting the environment. Now, some Ogonis say it’s time for the oil to flow once again. Chris Stein reports from Kegbara Dere, Nigeria.
Video

Video Winter Weather Strikes Eastern US...Again!

A new wintry blast has hit more than 20 states in the U.S. Midwest and Mid-Atlantic region, adding more snow to the piles from previous storms. Tired of shoveling snow, breaking the ice and dealing with accidents, flight delays and property damage, most Americans hope this is the last bout of cold for the season. Zlatica Hoke reports.
Video

Video Muslims Long Thrived in N Carolina Before Slaying of 3 Students

The killings of three Muslim students in North Carolina early last month came as Muslims across the United States have felt under siege, partly as a result of terrorist attacks being committed internationally in the name of their faith. But Muslims have long thrived in university cities in this part of the American South. VOA's Jerome Socolovsky reports.
Video

Video Fuel Shortages in Nigeria Threaten Election Campaigns

Nigeria is suffering a gas shortage as the falling oil price has affected the country’s ability to import and distribute refined fuels. Coming just weeks before scheduled March 28 elections, the shortage could have a big impact on the campaign, as Henry Ridgwell reports for VOA.
Video

Video Report: Human Rights in Annexed Crimea Deteriorating

A new report by Freedom House and the Atlantic Council of the United States says the human rights situation in Crimea has deteriorated since the peninsula was annexed by Russia in March of last year. The report says the new authorities in Crimea are discriminating against minorities, suppressing freedom of expression, and forcing residents to assume Russian citizenship or leave. Zlatica Hoke has more.
Video

Video 50 Years Later African-Americans See New Voting Rights Battles Ahead

Thousands of people will gather to mark the 50th anniversary of a historic civil rights march on March 7th in Selma, Alabama. In 1965, dozens of people were seriously injured during the event known as “Bloody Sunday,” after police attacked African-American demonstrators demanding voting rights. VOA’s Chris Simkins introduces us to some civil rights pioneers who are still fighting for voting rights in Alabama more than 50 years later.
Video

Video Craft Brewers Taking Hold in US Beer Market

Since the 1950’s, the U.S. beer industry has been dominated by a handful of huge breweries. But in recent years, the rapid rise of small craft breweries has changed the American market and, arguably, the way people drink beer. VOA’s Jeff Custer reports.
Video

Video Video Claims to Show Shia Forces in Iraq Executing Sunni Boy

A graphic mobile phone video is spreading on the Internet, claiming to show Iraqi forces or Shia militia executing a handcuffed Sunni boy. Experts have yet to verify the video, but already Islamic State followers are publicizing it across social media, playing on deep-rooted sectarian fears. VOA’s Jeff Seldin reports.
Video

Video Ukrainian Authorities Struggle to Secure a Divided Mariupol

Since last month's cease-fire went into effect, shelling around the port city of Mariupol has decreased, but it is thought pro-Russian separatists remain poised to attack. For the city’s authorities, a major challenge is gaining the trust of residents, while at the same time rooting out informants who are passing sensitive information to the rebels. Patrick Wells reports for VOA.
Video

Video Myanmar's Traditional Fashion Choices Endure

The sartorial choices of Myanmar’s men and women quickly catch the eye of any visitor to the tropical Southeast Asian country. But at a time when Myanmar’s political and economic opening is bringing affordable western fashions to the masses, will the country’s unique fashion trends endure? VOA Correspondent Steve Herman in Yangon explores that question.

All About America

Circumventing Censorship

An Internet Primer for Healthy Web Habits

As surveillance and censoring technologies advance, so, too, do new tools for your computer or mobile device that help protect your privacy and break through Internet censorship.
More

World Currencies

EUR
USD
0.9034
JPY
USD
120.24
GBP
USD
0.6550
CAD
USD
1.2440
INR
USD
62.254

Rates may not be current.