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

    Top US General: Turkish Media Report ‘Absurd'

    General Dunford rejects ‘irresponsible' claims of coup involvement by former four-star Army General Campbell, who led NATO forces in Afghanistan before retiring earlier this year

    Video Saving Ethiopian Children Thought to Be Cursed

    'Omo Child' looks at efforts of one African man to stop killings of ‘mingi’ children

    Protests Over Western Troops Threaten Libyan 'Unity' Government

    Fears mount that Islamist foes of ‘unity' government plan to declare a revolutionaries' council in Tripoli

    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.
    London’s Financial Crown at Risk as Rivals Eye Brexit Opportunitiesi
    X
    VOA News
    July 25, 2016 5:09 PM
    By most measures, London rivals New York as the only true global financial center. But Britain’s vote to leave the European Union – so-called ‘Brexit’ – means the city could lose its right to sell services tariff-free across the bloc, risking its position as Europe’s financial headquarters. Already some banks have said they may shift operations to the mainland. Henry Ridgwell reports from London.
    Video

    Video London’s Financial Crown at Risk as Rivals Eye Brexit Opportunities

    By most measures, London rivals New York as the only true global financial center. But Britain’s vote to leave the European Union – so-called ‘Brexit’ – means the city could lose its right to sell services tariff-free across the bloc, risking its position as Europe’s financial headquarters. Already some banks have said they may shift operations to the mainland. Henry Ridgwell reports from London.
    Video

    Video Recycling Lifeline for Lebanon’s Last Glassblowers

    In a small Lebanese coastal town, one family is preserving a craft that stretches back millennia. The art of glass blowing was developed by Phoenicians in the region, and the Khalifehs say they are the only ones keeping the skill alive in Lebanon. But despite teaming up with an eco-entrepreneur and receiving an unexpected boost from the country’s recent trash crisis the future remains uncertain. John Owens reports from Sarafand.
    Video

    Video Migrants Continue to Risk Lives Crossing US Border from Mexico

    In his speech Thursday before the Republican National Convention, the party’s presidential candidate, Donald Trump, reiterated his proposal to build a wall along the U.S.-Mexico border if elected. Polls show a large percentage of Americans support better control of the nation's southwestern border, but as VOA’s Greg Flakus reports from the border town of Nogales in the Mexican state of Sonora, the situation faced by people trying to cross the border is already daunting.
    Video

    Video In State of Emergency, Turkey’s Erdogan Focuses on Spiritual Movement

    The state of emergency that Turkish President Recep Tayyip Erdogan has declared is giving him even more power to expand a purge that has seen an estimated 60,000 people either arrested or suspended from their jobs. VOA Europe correspondent Luis Ramirez reports from Istanbul.
    Video

    Video Calm the Waters: US Doubles Down Diplomatic Efforts in ASEAN Meetings

    The United States is redoubling diplomatic efforts and looking to upcoming regional meetings to calm the waters after an international tribunal invalidated the legal basis of Beijing's extensive claims in the South China Sea. VOA State Department correspondent Nike Ching has the story.
    Video

    Video Four Brother Goats Arrive in Brooklyn on a Mission

    While it's unusual to see farm animals in cities, it's become familiar for residents of Brooklyn, New York, to see a little herd of goats. Unlike gas-powered mowing equipment, goats remove invasive weeds quietly and without adding more pollution to the air. As Faiza Elmasry tells us, this is a pilot program and if it proves to be successful, the goat gardener program will be extended to other areas of New York. Faith Lapidus narrates.
    Video

    Video Scientists in Poland Race to Save Honeybees

    Honeybees are in danger worldwide. Causes of what's known as colony collapse disorder range from pesticides and loss of habitat to infections. But scientists in Poland say they are on track to finding a cure for one of the diseases. VOA’s George Putic reports.
    Video

    Video Wall Already Runs Along Parts of US-Mexico Border

    The Republican Party’s presidential nominee, Donald Trump, gained the support of many voters by saying he would build a wall to keep undocumented immigrants and drugs from coming across the border from Mexico. Critics have called his idea impractical and offensive to Mexico, while supporters say such a bold approach is needed to control the border. VOA’s Greg Flakus has more from the border town of Nogales, Arizona.
    Video

    Video New HIV Tests Emphasize Rapid Results

    As the global fight against AIDS intensifies, activists have placed increasing importance on getting people to know their HIV status. Some companies are developing new HIV testing methods designed to be quick, easy and accurate. Thuso Khumalo looks at the latest methods, presented at the International AIDS conference in Durban, South Africa.
    Video

    Video African Youth with HIV Urge More Support

    HIV, the virus that causes AIDS, is the top killer of teens in sub-Saharan Africa. But many youths say their experience with the virus is unique and needs to be addressed differently than the adult epidemic. VOA South African Correspondent Anita Powell reports.
    Video

    Video Pop-Up Art Comes to Your Living Room, Backyard and Elsewhere

    Around the world, independent artists and musicians wrestle with a common problem: where to exhibit or perform? Traditional spaces such as museums and galleries are reserved for bigger names, and renting a space is not feasible for many. Enter ArtsUp, which connects artists with venue owners. Whether it’s a living room, restaurant, office or even a boat, pop-up events are bringing music and art to unexpected places. Tina Trinh has more.
    Video

    Video Scotland’s Booming Whisky Industry Fears Brexit Hangover

    After Britain’s vote to leave the European Union, Scotland’s government wants to break away from the United Kingdom – fearing the nation’s exports are at risk. Among the biggest of these is whisky. Henry Ridgwell reports on a time of turmoil for those involved in the ancient art of distilling Scotland’s most famous product.

    Special Report

    Adrift The Invisible African Diaspora

    World Currencies

    EUR
    USD
    0.9093
    JPY
    USD
    104.27
    GBP
    USD
    0.7612
    CAD
    USD
    1.3233
    INR
    USD
    67.329

    Rates may not be current.