19,
The article you quote is a couple of months old and from the Daily Torygraph. The fact that European banks have interbank loans in emerging markets does not surprise me. The whole article breathes: "look! we're not the only ones in trouble! we are not alone!".
Fact is, the UK is on it's own. EU countries are not. While Austria might suffer from stagnating growth in emerging markets, the value of the loans may decrease but not evaporate like money does in the States. It will cost them less to support their currency since they are in the european monetary system.
Excessive debt is, on average, far less of a problem in Europe than the States. Do not forget that the Bush administration managed to p*ss away a budget surplus to a deficit of 400 billion dollars even before the crisis hit. Estimated budget deficit for the coming fiscal year:
USD 1.000.000.000.000 !!! (and counting)
In absolute numbers that's an amount of epic proportions, as a percentage of GDP it's even more worrying. Yes, housing markets have collapsed in Spain, Ireland and the UK. The effect on the EU as a whole is more limited than in the US or the UK. The stabilization pact has prevented EU governments from overspending too wildly, meaning that they have more reserve options in addition to having a larger public sector and less bad credit.
SJ
The article you quote is a couple of months old and from the Daily Torygraph. The fact that European banks have interbank loans in emerging markets does not surprise me. The whole article breathes: "look! we're not the only ones in trouble! we are not alone!".
Fact is, the UK is on it's own. EU countries are not. While Austria might suffer from stagnating growth in emerging markets, the value of the loans may decrease but not evaporate like money does in the States. It will cost them less to support their currency since they are in the european monetary system.
Excessive debt is, on average, far less of a problem in Europe than the States. Do not forget that the Bush administration managed to p*ss away a budget surplus to a deficit of 400 billion dollars even before the crisis hit. Estimated budget deficit for the coming fiscal year:
USD 1.000.000.000.000 !!! (and counting)
In absolute numbers that's an amount of epic proportions, as a percentage of GDP it's even more worrying. Yes, housing markets have collapsed in Spain, Ireland and the UK. The effect on the EU as a whole is more limited than in the US or the UK. The stabilization pact has prevented EU governments from overspending too wildly, meaning that they have more reserve options in addition to having a larger public sector and less bad credit.
SJ
). 
