US subprime lending crisis felt in Finland as well

[Classic Finn]

US subprime lending crisis felt in Finland as well
Finnish banks seen to be able to withstand blows better than before



A number of Finnish financial experts feel that the banking system in the United States is in more serious trouble than is apparent on the basis of the current subprime loan crisis, and that the US banking system could face a situation similar to the one that Finnish banks faced in the early 1990s.
The banking crisis is giving American investment funds an incentive to convert corporate assets into cash. First to be divested are shares of companies peripheral areas, which tends to push down stock market prices outside the US - the Helsinki Stock Exchange included.
The crisis is further weakening the US dollar, which harms profitability of Finland's basic industries.
The experts say that American commercial banks have recorded only a small proportion of their future losses. The New York Times wrote on Friday that Merrill Lynch will have to report a decline in value of 15 billion dollars when it publishes its results next week. In October the bank fired its CEO Stan O'Neal after reporting massive losses.

According to Ari Aaltonen, Chairman of the Board of Celeres Fund Management, the US banking system is going through the same kinds of symptoms as the Finnish banking crisis 16 years ago, when he was the head economist at the Finnish Savings Bank Association.
Out of fear of further losses, banks stopped trusting each other and lending each other money. As a result, the Savings Bank group fell into the lap of the Bank of Finland, and other banks also suffered serious damage. The Finnish currency, the markka, plummeted in value, as the US dollar is doing now.

Aaltonen feels that US interest markets are in a state of chaos. The market does not function well because of the lack of confidence within the market.
"Investors are asking if there are any problems other than the subprime problem in the balance sheets of large international banks. They are perhaps one per cent of all of the problem. There are hundreds of hidden icebergs there."
"It is a question of structured financing in the United States. They are housing, car, and consumption loans, and they are all rotting away in people's hands."
Aaltonen says that the basic problem is that in American housing credit, the only collateral is the home itself.

Aaltonen paints an exceptionally grim picture of the situation facing American banks. He says that the financial system has already collapsed "in some way", but that the Americans are not saying it out loud.
"No American investment bank will say that it is, in, fact bankrupt, and so are the competitors." The US might have to set up junk banks financed by the federal government by issuing bonds worth billions of dollars. That is why nobody wants to buy US dollars, because huge amounts of bonds are coming onto the market.
"When this happens, one euro might be worth two or even three dollars", Aaltonen says. The euro is currently worth 1.47 US dollars.

EQ Bank portfolio manager Hannu Angervuo says that Finnish stock market shares are falling because American investors are pulling out of peripheral areas first. Share prices have declined by nearly 20 per cent since July.
"The US banking crisis is bigger than is recognised, and its full extent is not yet understood. For that reason, peripheral areas, such as Finland, Sweden and Norway, are easily abandoned", Angervuo says.
The rush away from the periphery is driven by fear that times will get worse than ever.
"Cash is the king, because nobody knows yet when the downhill slide will hit bottom."
Angervuo says that Finnish companies can withstand setbacks better than in years past. "They have few debts; for the first time ever, they have kept their money themselves. They have not bought out competitors at excessive prices."

Classic Finn

[Mike C.]

Yep!!!!

I think we've just seen the beginnings of a major contraction. The Congress needs to go look in the mirror before they start blaming the banks, since they put pressure on them to make loans that they knew were high risk. I have a terrible feeling that TS is about to HTF.

[Classic Finn]

I remember the so called recession here in Finland. Many here say it was deliberately done.

And so it was.

Classic Finn

[kerryd]

Here in Florida it's already turn ugly.Look at Wall Street , or as they're calling it now , fall street .

[Mike C.]

Heikki,

I think people in this country are not going to like this recession(depression), because we are not the same country we were when we went through the Great Depression of 1929. People then were more unified as a country. Now we have so many Americans that are standing around with their hands out, and are gonna be real unhappy when the money spigot is shut off. I don't think we will pull together, I think we will pull apart.

[Classic Finn]

Heikki,

I think people in this country are not going to like this recession(depression), because we are not the same country we were when we went through the Great Depression of 1929. People then were more unified as a country. Now we have so many Americans that are standing around with their hands out, and are gonna be real unhappy when the money spigot is shut off. I don't think we will pull together, I think we will pull apart.

It aint any different here. People are not as you say together as they were years ago. And whatever goes on in the USA will happen here a few months after.

Sad to say but its true..

The so called Economic Engine of all Europe which is Germany will be affected 1st then comes the rest of the train.

But as the writer above says: Finland learned a big lesson from the 90,s
so theyve been more careful. But how careful will be seen in a short while.

However it doesnt look good.

Heikki

[Miriam C.]

Wow, so I guess we shouldn't invest in Euros' either! Remember the saving and loan crisis. Perhaps the Federal Government needs to call the CEO's getting huge bonuses while driving the banks and investors money down a FRAUD perpetrated on the American people.

Perhaps they should have to give back that money as something other than a political bribe.

[Classic Finn]

:o Wow, so I guess we shouldn't invest in Euros' either! Remember the saving and loan crisis. Perhaps the Federal Government needs to call the CEO's getting huge bonuses while driving the banks and investors money down a FRAUD perpetrated on the American people.

Perhaps they should have to give back that money as something other than a political bribe.

Maybe its got somthing to do with the crooks at the World Bank?
Who knows..

Invest in Euros? Im going to invest in a New Age, Granny Knitted Wool Sock. Stuff what little saving into that. Its safer and more secure than any bank now a days.. Gold hold its price though..

Classic Finn

[mikeschn]

You guy are touching on the tip of the iceberg. We've got a problem over here, and as an individual, I don't know what to do. Once upon a time I thought buying gold was the thing to do, but now I am not sure. What if Georgie wants to grab all the gold? We already can't buy Gold Eagles. I think we can still get Loonies.

But what if Euros becomes the defacto currency? Should we buy Euros?

Humor me guys... What do we do?

[PaulC]

I'd be buying Gold, Mike. Not the stuff that's been processed through any mint, the stuff that comes in bars. The world economy revolves around that metal, as is proven by the way it continues to rise in value.
Our stockmarket has had 16 days of continual falls. So, yes, we are being affected by what's happening over there too.
Cheers
Paul

[Classic Finn]

I'd be buying Gold, Mike. Not the stuff that's been processed through any mint, the stuff that comes in bars. The world economy revolves around that metal, as is proven by the way it continues to rise in value.
Our stockmarket has had 16 days of continual falls. So, yes, we are being affected by what's happening over there too.
Cheers
Paul

Its shake rocknroll all over the world..gold prices at 900USD an ounce..
My wife follows this all the time but who has enough cash to buy the Golden Bricks...

We,ll be heading back to trading with skins but the question is what kind?

Classic Finn

[mikeschn]

Thanks for the thoughts Paul. As you already know, the average investor over here is going to be wiped out after Georgies inflation takes it's toll. I pulled out of the market about 6 weeks ago which prevented a huge market loss, but I prefer not to give up my life's savings to the rampant hyperinflation that is sure consume most savings accounts of all types over here. Gold would have been my first choice, but there's been rumors that Georgie is going to confiscate the yellow stuff before he leaves office. What would your second choice be?

Mike...

I'd be buying Gold, Mike. Not the stuff that's been processed through any mint, the stuff that comes in bars. The world economy revolves around that metal, as is proven by the way it continues to rise in value.
Our stockmarket has had 16 days of continual falls. So, yes, we are being affected by what's happening over there too.
Cheers
Paul

[Classic Finn]

You guy are touching on the tip of the iceberg. We've got a problem over here, and as an individual, I don't know what to do. Once upon a time I thought buying gold was the thing to do, but now I am not sure. What if Georgie wants to grab all the gold? We already can't buy Gold Eagles. I think we can still get Loonies.

But what if Euros becomes the defacto currency? Should we buy Euros?

Humor me guys... What do we do?

Yup what do we do... As far as the Euro becoming the defacto currency? I personally dont think so.

Maybe the China Mans Currency?

[PaulC]

Mike, I would probably look at the semi precious metals, then. Silver, copper and zinc are pulling huge price gains on the commodity markets, at the moment. The problem is that they may not sustain. Maybe a look at the futures market might be in order.

Cheers
Paul

[Classic Finn]

Here is another great piece of news..

Unless the equity markets can be calmed, a panic is about to happen, making the statement "This is it" a horrible reality.

If the equity markets cannot be calmed then:

Recognize this is the Formula happening like everything else much sooner and much bigger in its implications than anticipated.
* Gold will rise to $1650 as an almost immediate effect of what will be done to attempt to fend off a total panic starting to take place in general equities, therein threatening to be followed by all credit markets of all kinds.
* The funds and hotshot short term traders in gold shares will be killed by the upward explosion of the gold price about to occur.
* The PPT and the Fed will step out of gold’s way because gold is one of the tools used in 1930 by Roosevelt and in 2000 by Bush. It will be used again now on the upside.
* Gold is the only insurance there is against what all this means because a panic in equities will blow the financial system, already coming apart, to smithereens.
* All country funds would shut down on any further investments in "at the wall" financial institutions.
* The rollover in credit and default derivatives would exceed the entire foreign debt of the USA.
* The rest of the $450 trillion dollar mountain of derivatives would start a disintegration like nothing you have every seen in your lifetime.
* Consumer demand would slam shut.
* The auto industry might as well go into liquidation this coming Monday, avoiding the June 2008 rush.
* The US dollar would burn a hole in the floor going directly to .5200 or lower.
* As the dollar disintegrates gold would rocket to and through $1650 in days.
* The markets for general equities would all have to institute total trading halts every 100 points on the downside for 30 minutes each.
* All commercial call loans would be called.
* All debtors one day late on any payment, lacking grace period, would be liquidated. All debtors over one day of the grace period would be liquidated.
* It is clearly visible to anyone with eyes or a mind to think that the PPT has lost all semblance of control in the equity markets and will soon in all remaining markets.
* The commercial paper credit market which is almost dead will die totally.
* Should no emergency action take place soon, you will see an old fashioned panic of the 1929 variety. "