Crisis on the international moneymarket
Bad, bad American banks. Giving mortgages to people who have a high risk of not being able to pay the monthlee fees, and reselling the packaged mortgages to other institutions.
Oh well, it has happened, and we cannot do anything about it.
With the prices of housing stagnating, and the dollar decreasing in value, a crisis of unknown propotions seems inevitable. With many mortgages turning out to be non-collectable, decreasing prices of homes and a worsening competitive position, the American economy is up for something. Standard&Poor has calculated banks and financial instututions affected by the imminent happening already have written off about 146 billion dollar, and another 265 billion is to follow.
These dazzeling numbers, perhaps a bit overestimated, have to be concerning for all those involved, yet our government stays relatively cool under it.
Balkenende en our minister of Finance Bos have both claimed we are in quite a good position, and are only sideways affected by any bad mishaps, if they occur.
This relative lack of interest is awkward, and not appripriate for the current times.
With our country and its economy relying on the financial sector (ING, ABN AMRO, Rabobank) any bad developments among one of these banks is disproportionally affecting our day-to-day life. A risk our leaders will have to be aware of, yet they do not show it.
Proclaiming positive messages when not appropriate is giving false hope to the citizens, and can thus be claimed to be lying.
This is not what they intended, now is it?
While financial institutions are important, consumers are, in the end, the most determining factor of economic performance. Their confidence is then also the most important KPI. Messages of hope isn’t such a weird strategy in the light of that. In addition, we’re really nót that dependant of the US economy. It’s mostly a mental matter.
So while I think we should be careful (I for one wouldn’t want to be buying a house now), I’d also avoid taking Wellink’s position that we’re in a grave situation. I for one think they’re not giving false hope.
I put it like that to make a firm point, I was aiming for it to raise attention.
I think their optimism is slightly overreacting, and it should be a little tempered. Yes, encouraging ‘us’ to keep faith in our economy is a good thing, yet I think it should not be treated as lightly as it is being done right now.
I agree wit Tim, yes there are problems (the US is loaning their living standard together) and because of that a shift in world curencies (to Euro, Yuan) will take place. How quick that will hapen is in the hands of the Chinese that is funding the USA at this moment.
But a by far greater risk for the economy is pessimism, consumers should not get the idea that they need to postpone their expences/investments because that will be the real pain for the economy. And be frank, look around you and you can see that economically it is not going that bad in the Netherlands and Europe as a whole.