May 11, 1931. "Creditanstalt", a little-known Austrian bank suddenly announced that they are unable to make payments to pay off their debt. The result — an uncontrolled chain reaction.
The failure of the bank, stock market collapse, mass closures, 25 percent unemployment, trade wars, rampant inflation, currency collapse, the Great Depression, World War II. It all began with a little-known bank in a small country in central Europe.
A similar event, separating one era to another, is about to happen in Europe.
Last week was discovered fact that the Franco-Belgian banking giant Dexia was virtually isolated from the markets for debt and in desperate lack of funds. The outflow of deposits from the bank — one only Tuesday seized over 300 million euros.
Investors also fled, causing a rapid drop in the value of bank shares in the category of penny. On Thursday, the trading of shares of the bank were suspended pending a decision by governments.
The news caused the outbreak of hysteria among Belgian and French politicians. Those same authorities have spent billions bailing out the bank in 2008. It was thought that with it is all right.
The situation is complicated by the fact that Dexia passed the "excellent" not one, but two "stress test" of the European Bank (last July).
And if you do not trust banks (for the reason that they are not clean by hand), as well as experts and supervisory authority over them (because they are either liars or profane), so who then believe?
Which brings us to the issue at the heart of Europe's banking crisis undermined confidence. If the collapse of 2008 has taught us anything, it's that confidence — is the last thing that the banks can not afford to lose in a crisis.
Unfortunately, Dexia is not an exception. This is only the most conspicuous bomb that is just waiting to explode.
On Friday, S & P downgraded the rating of 12 banks in the UK and nine in Portugal, including the government-owned British bank Lloyds leviathans and Royal Bank of Scotland.
The threat to the economy is so serious that to maintain it, the British Government announced that it would begin the next round of quantitative easing (QE). Banks will electronically digitized 75 billion pounds.
It is the policy of Zimbabwe. After the panic will subside, who will need the pounds when they just created out of thin air? Value is determined by rarity and resistance to forgery. But repeatedly announcing additional cycles QE, the Bank of England and the danger of burying both. Pound will be punished. Add another zero to the price of a loaf of bread.
Chairman of the Bank of England Governor Mervyn King defended his actions by saying that this is the most serious financial crisis that the world had known, at least since the 1930s. "If not at all." As he said, "the prospects of a sharp deterioration" means that justified even more monetary stimulus measures. In other words, the risk of undermining the pound was outweighed by the danger of immediate economic collapse. Therefore be devalued pound — further destabilizing the international monetary system.
If the government "will not be able to tackle the issue credible way, I think, maybe in two or three weeks we will have a collapse … the entire European banking system — warns IMF advisor Robert Shapiro. — We're not just talking about a small Belgian bank, we are talking about the largest banks in the world, the largest in Germany, in France, the process will expand, it will spread to the United States, the United Kingdom … it will spread everywhere because the global financial system is highly interconnected ".
Two or three weeks of the normal state may be all that's left in this world. "All of these banks — doubles every significant bank in the United States, Britain, Japan and all over the world" — warns IMF advisor. — In my view, this crisis may be more severe than in 2008. "
More severe than in 2008? Bear Stearns, Lehman Brothers, IndyMac Bank, Countrywide, Wachovia, Merrill Lynch, Washington Mutual, Fannie Mae, Freddie Mac — an open list — all went bankrupt or were nationalized. Where to next?
Think about it: in 2008, the banking system was insolvent. Three years later, the banking system is still insolvent, but now, due to the massive action to save them on the verge of bankruptcy were already own government.
Yesterday, after a hard and long emergency meeting, the policy of France, Belgium and Luxembourg have agreed to hang on to the taxpayers 211 billion euros to support Dexia. But how much more debt can take on the these countries before there is a risk of default on them obligations? Will this beylaut last? Agency Moody's credit rating immediately placed Belgium on review for a downgrade. For France is also the case does not arise.
But if the Europeans barely able to cope with the situation around its banks, who will pull out Greece? What about Spain and Italy? Whom to pay for the war in Libya?
"We are on the verge of structural collapse, the financial world is rapidly entraining into this ugly reality, which is comparable to the Thirties and the Second World War — warns former Chase Manhattan analyst Julian Phillips. — "Prospects for recovery of more than vague. In developed countries, too much debt to be repaid, so even more debt will only aggravate the situation. "
It seems that the events get out of control. On Monday, British Prime Minister David Cameron implored European leaders to take a "big bazooka" — a typical approach to prevent collapse.
Specifically, Cameron wants Germany had "collective responsibility" for Europe. Need a single market with a single government, he said. "We need to use all the … Time is short, and the situation threatening."
More ominous words and not pick up. Time is short. Threatening situation. However, pushing Germany to take control of Europe, the British politician did almost the most short-sighted and his incriminating statement of all. Shortage of imitators Chamberlain experience is not necessary.
As recently wrote Gerald Flurry (founder of "Philadelphia Church of God", the editor of The Trumpet, television personality, known for his interpretations of current events in light of Bible prophecy, approx. Mixednews), the current economic crisis could be "thus event", which will present the German Empire always slips out of her hands.
Great crisis gives great opportunities. Watch out for Germany's role in the resolution of the European crisis. And read the article by Gerald Flurry, "Fourth Reich is here."