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

Turkey's Erdogan: Women Not Equal to Men

Speaking at conference in Istanbul, President Erdogan says Islam has defined a position for women: motherhood More

Ahead of SAARC Summit, Subdued Expectations

Some regional analysts say distrust between Pakistani, Indian officials has slowed SAARC's progress over the year More

Philippines Leery of Development on Reef Reclamation in S. China Sea

Chinese land reclamation projects in area have been ongoing for years, but new satellite imagery reportedly shows China’s massive construction project 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.
Aung San Suu Kyi: Myanmar Opposition to Keep Pushing for Constitutional Changei
X
November 24, 2014 10:09 PM
Myanmar opposition leader Aung San Suu Kyi says she and her supporters will continue pushing to amend a constitutional clause that bars her from running for president next year. VOA's Than Lwin Htun reports from the capital Naypyitaw in this report narrated by Colin Lovett.
Video

Video Aung San Suu Kyi: Myanmar Opposition to Keep Pushing for Constitutional Change

Myanmar opposition leader Aung San Suu Kyi says she and her supporters will continue pushing to amend a constitutional clause that bars her from running for president next year. VOA's Than Lwin Htun reports from the capital Naypyitaw in this report narrated by Colin Lovett.
Video

Video Mali Attempts to Shut Down Ebola Transmission Chain

Senegal and Nigeria were able to stop small Ebola outbreaks by closely monitoring those who had contact with the sick person and quickly isolating anyone with symptoms. Mali is now scrambling to do the same. VOA’s Anne Look reports from Mali on what the country is doing to shut down the chain of transmission.
Video

Video Ukraine Marks Anniversary of Deadly 1930s Famine

During a commemoration for millions who died of starvation in Ukraine in the early 1930s, President Petro Poroshenko lashed out at Soviet-era totalitarianism for causing the deaths and accused today’s Russian-backed rebels in the east of using similar tactics. VOA’s Daniel Shearf reports from Kyiv.
Video

Video Hong Kong Protests at a Crossroads

New public opinion polls in Hong Kong indicate declining support for pro-democracy demonstrations after weeks of street protests. VOA’s Bill Ide in Guangzhou and Pros Laput in Hong Kong spoke with protesters and observers about whether demonstrators have been too aggressive in pushing for change.
Video

Video US Immigration Relief Imminent for Mixed-Status Families

Tens of thousands of undocumented immigrants in the Washington, D.C., area may benefit from a controversial presidential order announced this week. It's not a path to citizenship, as some activists hoped. But it will allow more immigrants who arrived as children or who have citizen children, to avoid deportation and work legally. VOA's Victoria Macchi talks with one young man who benefited from an earlier presidential order, and whose parents may now benefit after years of living in fear.
Video

Video New Skateboard Defies Gravity

A futuristic dream only a couple of decades ago, the hoverboard – a skateboard that floats above the ground - has finally been made possible. While still not ready for mass production, it promises to become a cool mode of transport... at least over some surfaces. VOA’s George Putic reports.
Video

Video Falling Gas Prices Impact US Oil Extraction

With the price of oil now less than $80 a barrel, motorists throughout the United States are benefiting from gas prices below $3 a gallon. But as VOA’s Kane Farabaugh reports, the decreasing price of petroleum has a downside for the hydraulic fracturing industry in the United States.
Video

Video Tensions Build on Korean Peninsula Amid Military Drills

It has been another tense week on the Korean peninsula as Pyongyang threatened to again test nuclear weapons while the U.S. and South Korean forces held joint military exercises in a show of force. VOA’s Brian Padden reports from the Kunsan Air Base in South Korea.
Video

Video Mama Sarah Obama Honored at UN Women’s Entrepreneurship Day

President Barack Obama's step-grandmother is in the United States to raise money to build a $12 million school and hospital center in Kogelo, Kenya, the birthplace of the president's father, Barack Obama, Sr. She was honored for her decades of work to aid poor Kenyans at a Women's Entrepreneurship Day at the United Nations.
Video

Video Ebola Economic Toll Stirs W. Africa Food Security Concerns

The World Bank said Wednesday that it expects the economic impact of the Ebola outbreak on the sub-Saharan economy to cost somewhere betweenf $3 billion to $4 billion - well below a previously-outlined worst-case scenario of $32 billion. Some economists, however, paint a gloomier picture - warning that the disruption to regional markets and trading is considerable. Henry Ridgwell reports from London.
Video

Video Chaos, Abuse Defy Solution in Libya

The political and security crisis in Libya is deepening, with competing governments and, according to Amnesty International, widespread human rights violations committed with impunity. VOA’s Al Pessin reports from London.
Video

Video US Hosts Record 866,000 Foreign Students

Close to 900,000 international students are studying at American universities and colleges, more than ever before. About half of them come from Asia, mostly China. The United States hosts more foreign students than any other country in the world, and its foreign student population is steadily growing. Zlatica Hoke reports.

All About America

AppleAndroid

World Currencies

EUR
USD
0.8048
JPY
USD
118.04
GBP
USD
0.6382
CAD
USD
1.1270
INR
USD
61.892

Rates may not be current.