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

Karzai's Legacy: Missed Opportunities?

Afghanistan's president leaves behind a much different nation than the one he inherited, yet his legacy from 13 years in power is getting mixed reviews More

Video Secret Service Chief Under Fire for White House Security Breach

Julia Pierson faces tough questions from lawmakers after recent intrusion at White House, says: 'It is clear that our security plan was not executed properly' More

Frustrated, Liberian Students Want Ebola Fight Role

Thousands have volunteered to go to counties, rural villages to talk to people in their language about deadly virus 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.
Malaysia Struggles to Stop People Joining Jihadi
X
Mahi Ramakrishnan
September 30, 2014 2:16 PM
Malaysian authorities say militant groups like the so-called "Islamic State" have used social media to entice at least three dozen Malaysian Muslims to fight in what they call "jihad" in Syria and Iraq. As Mahi Ramkrishnan reports from Kuala Lumpur, counterterrorism police are deeply worried about what could happen when these militants return home.
Video

Video Malaysia Struggles to Stop People Joining Jihad

Malaysian authorities say militant groups like the so-called "Islamic State" have used social media to entice at least three dozen Malaysian Muslims to fight in what they call "jihad" in Syria and Iraq. As Mahi Ramkrishnan reports from Kuala Lumpur, counterterrorism police are deeply worried about what could happen when these militants return home.
Video

Video Could US Have Done More to Stop Rise of Islamic State?

President Obama says airstrikes against Islamic State militants in Syria will likely continue for some time because, in his words, "there is a cancer that has grown for too long." So what if President Obama had acted sooner in Syria to arm more-moderate opponents of both the Islamic State and the Syrian government? VOA State Department Correspondent Scott Stearns reports from the United Nations.
Video

Video Treasure Hunters Seek 'Hidden Treasure' in Central Kenya

Could a cave in a small village in central Kenya be the site of buried treasure? A rumor of riches, left behind by colonialists, has some residents dreaming of wealth, while others see it as a dangerous hoax. VOA's Gabe Joselow has the story.
Video

Video Iran's Rouhani Skeptical on Syria Strikes

Iranian President Hassan Rouhani expressed skepticism Friday that U.S.-led airstrikes in Iraq and Syria could crush Islamic State militants. From New York, VOA’s Margaret Besheer reports the president was also hopeful that questions about Iran’s nuclear program could be resolved soon.
Video

Video US House Speaker: Congress Should Debate Authorization Against IS

As wave after wave of U.S. airstrikes target Islamic State militants, the speaker of the Republican-controlled House of Representatives says he would be willing to call Congress back into session to debate a formal, broad authorization for the use of military force. VOA’s Michael Bowman reports from Washington, where legislators left town 10 days ago for a seven-week recess.
Video

Video Ebola Patients Find No Treatment at Sierra Leone Holding Center

At a holding facility in Makeni, central Sierra Leone, dozens of sick people sit on the floor in an empty university building. They wait in filthy conditions. It's a 16-hour drive by ambulance to Kailahun Ebola treatment center. Adam Bailes was there and reports on what he says are some of the worst situations he has seen since the beginning of this Ebola outbreak. And he says it appears case numbers may already be far worse than authorities acknowledge.
Video

Video Identifying Bodies Found in Texas Border Region

Thousands of immigrants have died after crossing the border from Mexico into remote areas of the southwestern United States in recent years. Local officials in south Texas alone have found hundreds of unidentified bodies and buried them in mass graves in local cemeteries. Now an anthropologist and her students at Baylor University have been exhuming bodies and looking for clues to identify them. VOA’s Greg Flakus has more from Waco, Texas.
Video

Video Ebola Robs Liberians of Chance to Say Good-Bye to Loved Ones

In Liberia, where Ebola has killed more than 1,500 people, authorities have worked hard to convince people to allow specialized burial teams to take away dead bodies. But these safety measures, while necessary, make it hard for people to say good bye to their loved ones. VOA's Anne Look reports on the tragedy from Liberia.
Colonel Steve ‘Spiros’ Pisanos left Greece and came to the U.S. to learn to fly. He flew fighters for the Allies in World War II, narrowly escaping death multiple times.Colonel Steve ‘Spiros’ Pisanos left Greece and came to the U.S. to learn to fly. He flew fighters for the Allies in World War II, narrowly escaping death multiple times.

AppleAndroid

World Currencies

EUR
USD
0.7866
JPY
USD
109.25
GBP
USD
0.6139
CAD
USD
1.1120
INR
USD
61.428

Rates may not be current.