Don't blame it on bad mortgages

About a decade ago, deregulation and globalisation, induced a decrease in the bank's service sales income. Until then they could - without much risk taking - make a sound profit from trading stocks or underwriting and selling bonds for other people and institutions. In order to adapt, the banks started taking (huge) risks of their own and thought that they could spread the risk around. If it had not been bad mortgages, it would have been other adventurous risks that would have brought banks down.

Aurélie Demunter

Source: http://www.city-journal.org/2008/eon0102ng.html

Rumour hits Dexia

Due to the rumours about the nationalization of Dexia the share price hit a low. In the morning and early afternoon the Dexia share had made a gain of 5%, but in the afternoon somewhere about 15h00 the share price was dragged down by the rumours about the further nationalization of Dexia. The further nationalization of Dexia could be disadvantageous for the share holders. Later on these rumours were denied by the spokesman of Dexia but soon before the closure of the stock market the share lost another 15%.

Thomas Deman

source: http://www.tijd.be/nieuws/ondernemingen_financien/Geruchten_over_nationalisering_geven_Dexia_dreun.8090478-433.art

Bye bye Dow(n) Jones

Stocks bounced back from their worst week ever with one of their best performances in history as everybody cheered a global cash infusion designed to bring relief the credit market and avoid a global meltdown. The gains of Monday were almost universal, with all but 3 of the Nasdaq 100 gaining and one 1 of the Dow 30 declining. These gains did effect commodities like crude oil and gold, in receptive order a decline and a gain. But the biggest question still remains: " Is this the end of the crisis?" Probably not, but it's a start.

http://money.cnn.com/2008/10/13/markets/markets_newyork/index.htm?postversion=2008101315

Frederic Blockeel

Moonlighting tackled by the construction industry

Forty percent of all construction work produced by building workers is assumed to be accomplished by working on the side. Therefore, the construction industry, would like to encourage legal work by lowering taxes and taking a firm line with moonlighters. This can be achieved by cutting down National Insurance contributions, without punishing the good trough the increase of administration. After all, moonlighting has disadvantages for the client as well; what to do without an invoice when you’re not satisfied with the done job?

http://www.standaard.be/Artikel/Detail.aspx?artikelId=DMF13102008_093&ref=front

Thomas De Jaeger

Icelandic crisis affects the Netherlands

Due to the Icelandic financial crisis an increasing number of Dutch stakeholders risk to lose a great amount of their money. Millions of euros were invested in Icelandic banks by Dutch citizens, provinces etc.
Unlike natural persons, who can call upon a guarantee for their deposits, enterprises and governments do not possess this privilege. If Iceland and Icelandic banks would be declared bankrupt, this would greatly amplify the impact on Dutch economics.

Buysse Frederick
00700758

http://www.zakenlui.nl/?p=9599
http://www.hotelbusiness.nl/?p=7624
http://nl.wasalive.com/nl/ijslandse+crisis

Bank notes or gold bars?

Changing your money into gold knows a tremendous success nowadays. Since September, online gold brokers have tripled their number of accounts. The main reason for this conversion is the fact that gold is less susceptible to changes in the world market than money. Nevertheless, brokers are already experiencing other problems: gold is very hard to find due to a lack of sellers of gold.

Sara Den Blauwen, http://www.guardian.co.uk/money/2008/oct/13/savings-investing

Wishful Thinking.

The Flemish Government made a new law concerning help to the parents having children at school. This financial support is to help paying for school furniture and books to be bought. Till now this help has not been extended to University students yet. This would also be of great help for their parents and especially for those parents having more than one child at the University.

Magali Deloof
The VRT News from last week.

Bank slogans

In these times of recession banks are not having their best days, but somehow some of the bank slogans seem to have been prepared for this crisis. The examples ‘the short term has no future’ (Dexia), ‘ask why’ (Enron) and ‘here today, where tomorrow?’ (Fortis) are very up-to-date. On the contrary, other bank slogans might need to be reviewed: ‘you can count on us’ (IndyMac) or ‘where vision gets built’ (Lehman Brothers). Countrywide even predicted the crisis through its slogan: ‘lender that actually finds ways to make loans’ and Fannie Mae with ‘as the American dream grows, so do we’, didn’t think of what might happen when the American dream couldn’t grow. (Steven Bogaert)

http://www.economist.com/finance/displaystory.cfm?story_id=12342164

Icelandic football supporters: “We’ve got your money”

In the recent events of the financial crisis, the Dutch government has gotten reports of municipalities that had money on the fallen bank of Iceland, Landsbanki. Both the community of Goes, as the one of Pijnacker-Nootdorp had a total of 12 million euro on the Icelandic bank. Groningen is the luckiest municipality, because they transferred all of their money to ING and ABN-Amro before the bankruptcy of the bank. The community of Goes isn’t in big problems, as a local council member said: “We can take a hit”.

Kenny De Geeter

(source: http://www.telegraaf.nl/binnenland/2180419/__Gemeentemiljoenen_in_IJsland__.html?p=39,1)

Savers vault from the banks to a safe place at home

The sales of houshold safes have risen significantly since the credit crunch started. People don’t trust their banks anymore and they want to keep their savings locked at home. Another explanation for the increase in sales of domestic safes is the fear people had for a collapse in the housing market: they sold their properties in time and moved into rented houses, where they enjoy the money they assumed during the property boom. Insurance companies advice wealthy people who lost confidence in the banking system to hold their money in safety deposit boxes rather than home safes.

Jef De Paep

http://www.timesonline.co.uk/tol/money/savings/article4909756.ece

Gas, electricity and food: highly needed, but how to pay them off?

Nowadays pensioners are part of the people that are hit the most by the inflation. The weekly payment pensioners are given has increased by ₤ 4,54, to make sure pensioners don’t get stuck in inflation, but even that isn’t enough to pay off their rising gas, electricity and food bills. The problem is that the only income pensioners have, is the income given by the government, and that won’t do to pay off their debts. A positive thing that the pensioners can keep in mind is that the inflation is coming at a peak and the economists forecast that it will fall back in the coming months.

Delphine Brossé

http://business.timesonline.co.uk/tol/business/economics/article4940594.ece

Financial crisis strikes again

Powerless we watch how the financial crisis plays an endless game of dominoes, with Iceland one of the already fallen pieces. Iceland’s economy never has had it easy, less than 30 cents of every loan issued was backed by deposits and household debts have been raising to 213% of disposable income. With help of the government they tried to stabilise the economy by earning foreign deposits and raising interest rates, but the financial crisis made it crash down, leaving huge debts and panic behind. Iceland may be a small country, but its economy is facing a huge financial crisis, that just keeps on playing dominoes and drags other countries with it.

Stefanie De Mesure

http://www.economist.com/finance/displaystory.cfm?story_id=12382011

Retirement cost to hit £1 million for those over 100

Rising retirement costs will be a big problem for all people living in this economical turmoil. These costs will triple within the next two decades due to longevity and the rising food and fuel bills. By the middle of this century, the cost of retirement could exceed £1.3 million if the rate of inflation remains at current levels for someone living to 100. People are forced to take a long term look at their financial situation if they would like to have a comfortable older life, without the need of selling their houses to pay for their retirement.

Ulrich De Bleecker

Source:
http://www.telegraph.co.uk/finance/personalfinance/pensions/3187425/Retirement-cost-to-hit--1-million-for-those-over-100.html

The banking bust and the book bubble

When there is a crisis in one major sector, you wouldn’t immediately expect a boom in another sector, but nothing could be further from the truth. The publishing industry is booming because everyone seems eager to read and write about this ‘brand new’ subject: the financial crisis. However, most books won’t be finished within one or two years, and by then the interest in books on the financial crisis will have diminished. Books that will be finished earlier might not be of a very high quality, so this mass production probably won’t lead to higher profits.

Lieselot Danneels

Are Icelanders expecting a war?

That’s a question you could ask if you pay a visit to a supermarket of clothing shop in Iceland. Those markets/shops don’t have much over from their stock because of the bad economical situation that rules the country nowadays, almost like in times of war. The bankruptcy from three of the biggest banks of Iceland and the devaluation of the national currency caused and still cause shortage of stock in all supermarkets. Lack of hard currency together with the devaluation are making it almost impossible to import new clothes and food, which makes that they only have enough left for two weeks...

David De Prest

Source: http://www.hln.be/hln/nl/2401/Crisis-op-de-beurs/article/detail/450648/2008/10/14/IJslanders-gedoemd-tot-hamsteren-door-bijna-lege-rekken.dhtml

Shares: who dares?

Now the world is facing what is said to be the biggest financial crisis since the Depression, and several banks all over the world are heading to potential bankruptcy and panic-stricken savers are rushing to withdraw their money, stocks are tumbling and an important question rises in our minds: Is it a good time to buy stocks? Rothschild once said that it is time to buy when there is blood in the streets and now the streets are pouring, people are hesitating because of the uncertainty and the high risks that are involved. Also according to investors now, today is the best opportunity to invest in a generation and their ideas influence people hoping for a tremendous rebound who are trying to secure their financial future. But the fluctuations of the stock market are unpredictable and only time will tell if the investing daredevils will be rewarded for their risky behaviour.
Valentine Bekaert

http://business.timesonline.co.uk/tol/business/markets/article4925682.ece

Zimbabwe’s inflation rate around 231,000,000%

The latest official figures (July 2008) have shown that the inflation rate in Zimbabwe has reached proportions which are outrageous, even considering the yet astonishing 11,200,000% reached last month. As one would suspect, the current political issues the Middle-African country is facing these days, aren’t really helping to ease the rocketing prices. Especially bread and cereals are getting very hard to obtain for the average Zimbabwean citizen, which will lead to a serious food crisis unless the economic policy changes really fast, according to the WFP. Mr. Mugabe however, the current Zimbabwean president (although his victory after the last elections was very ambiguous, to say the least) believes Western sanctions are the main cause of this economic crisis.

Source (BBC): http://news.bbc.co.uk/2/hi/africa/7660569.stm

Gregory Casier

first crisis,then party

Shortly after their problems on the stock market,Fortis organized a luxurious party in Monaco.Fortis insurance Belgium hired the most expensive hotel in the tax haven and invited 50 guests.This action will cost the troubled Belgian bank and insurance company 150000 Euro.Fortis declares that is aware of the controversy among his stockholders.
Sam De Bondt

Bush outlines radical plan to part-nationalise banks

The US government is planning to buy $250bn shares in leading banks so that they can continue to make loans. President Bush has taken this measures as a temporary plan to help protect the free market. For now, nine banks are participating in the plan, including top Wall Street banks. The US government has already had a lot of positive response from people in leading positions as well as from the stock market, where shares opened sharply higher.

Jasmine De Coninck

http://www.guardian.co.uk/business/2008/oct/14/us-banks-bailout-bush

Finance students are not panicking about their future

We see that even in this period of uncertainty, applications for financial studies have risen this year. The students are interested in finances because they want to find out what to do in these times of crisis and the students definitely know that they have to be one of the best, otherwise there's no place for them on the top, so they are improving their chances by extending their knowledge.
For those who allready graduated, the future isn't looking so good, they thought to get a nice job with a high salary, but in reallity many of them study longer, move abroad to look for a job or are fired because the number of jobs is decreasing.
The opportunity of finding a job depents on the state of the fluctuating financial market, it's all about correct timing.
De Muynck Hannelore (http://www.nytimes.com/2008/10/12/education/12student.html?pagewanted=1&_r=1&ref=business)

Measures designed to address elevated pressures in the short-term US dollar funding markets

Central banks are working together to improve liquidity in short-term US dollar funding markets. Financial institutions can borrow any amount of US dollars from the ECB, SNB and BoE with a due date of 7, 28 or 84 days, at fixed interest rates. To insure whatever quantity of US dollars is demanded the Fed, ECB, BoE and SNB will increase their swap lines. Also the Bank of Japan is considering similar measures.

http://www.boj.or.jp/en/type/release/adhoc/un0810d.pdf

http://www.ecb.int/press/pr/date/2008/html/pr081013.en.html

Ludwig Acke

Hong Kong Backs Its Banks

Since the economical crises started approximately one month ago in the USA, lots of previously strong banks tumbled into a financial gap which caused huge losses for the shareholders.

To prevent scenes such as the one of Lehman Brothers, American and European governments forced Asian regulators to be aware and take precautions for their banks before they run into trouble.

Therefore Hong Kong’s financial representatives declared that they would inject their banks with $773 billion and reassured all the people that their banking system is robust, healthy and that there is no need to panic.

Hong Kong specialists say that they are rather making preparations for a rainy day instead of already fixing real problems in the banking system.

Roeland Delrue

Source: http://www.nytimes.com/2008/10/15/business/worldbusiness/15deposit.html?_r=1&ref=business&oref=slogin

Bank of Japan

For the nineteenth successive workday the Japanese central bank has intervened in the market, this time with a money injection. The bank of Japan helps banks with liquidity problems wit short-term loans. Tuesday the bank of Japan assigned ¥ 2000 bn (€ 15 bn) in two phases. Friday the central bank already pumped ¥ 4500 bn (€ 34 bn) in the market.

Saihou-Mass Cham

http://www.tijd.be/nieuws/economie-financien/Japanse_centrale_bank_pompt_miljarden_in_de_markt.8090245-600.art

US government to the rescue!

The US government announced that they will invest $125bn in a wide variety of American Banks. This investment is part of a rescue plan for the financial sector, which was recently approved by the Congress. At first the US government wasn't supporting this kind of operations, but after some succeeded European examples, Washington changed its mind. The government hopes to restore confidence in the sector by investing in this banks.

Helena De Bruycker
http://www.standaard.be/Artikel/Detail.aspx?artikelId=DMF14102008_028&kanaalid=9

Request for new accouting rules

The EU’s top regulator proposed Europe to change the current accounting rules to give the European Banks more flexibilty in the case of assets. The new rules would ensure that banks in the EU have the same conditions as banks in the US. Individual banks could move assets from their trading books to their banking books, thanks to the (possible) changes of the accounting rules. Banks and markets commissioners are hoping that Europe will accept the request.

Nathan Braeckmans

Source: Financial Times (http://www.ft.com/cms/s/0/c2842994-9568-11dd-aedd-000077b07658,dwp_uuid=bd2f85d2-8e90-11db-a7b2-0000779e2340.html)

What about the customers of Kaupthing?

Customers of Kaupthing can’t withdraw money anymore from their accounts. The Icelandic bank was taken over last Thursday by the government. The Icelandic government only give a guarantee for the whole amount of savings for their inhabitants, which means that foreign customers will probably only get a maximum of 20,000€ back from their savings. The Belgian prime minister is negotiating with the government of Luxemburg, that took over the subsidiary of Kaupthing, to obtain more money for the Belgian customers.

Fortis share tumbles a dazzling 64 percent

This morning [14/10/2008], the Fortis share reopened on the stock exchange with a damage of 64 percent and now has a value of a negligible 1,93 euro. This means a disastrous loss for most of the shareholders, who bought their shares for twice, tree times till even twenty times that price. For the moment, they can only pray and hope for the share to recover so they can minimize their losses. Difficult times for those who believed the world of finance couldn’t fail!

Reinout Denys

Sweden, Britain intervene in Iceland bank crisis

Iceland's biggest bank received an emergency loan from Sweden and Britain guaranteed deposits in an Icelandic bank's online unit .


This comes after a billion dollar loan from Russia to the Iceland to prevent national bankruptcy.
Due to the huge financiel troubles Iceland is in, these helping hands were more then welcome.
This also prevents the effects that a full-blown collapse would have on the rest of Europe, given the heavy investment by Icelandic banks and companies across the continent.

http://www.mlive.com/newsflash/business/index.ssf?/base/business-86/122346744476600.xml&storylist=business

Gilles Bergez

Investing in Solar Panels

In Belgium buying solar panels appears to be an attractive, risk free investment rather than an energy saving project.

Although the real payback time, without grants, might be longer than the lifetime of your panels, investing in solar energy seems worthwhile because of the fiscal advantages. Thanks to the combination of a 40% tax reduction, an investment support and the guaranteed subventions for the next 20 years, payback time can come down to only 5 years. By investing €500 in this renewable energy, you merely save 75 kWh a year, which explains why, in other countries which don’t have such a government support, the panels aren’t a big success.

(http://www.tijd.be/nieuws/binnenland/Zonnepanelen_risicoloze_belegging.6891004-438.art; http://www.standaard.be/Archief/Zoek/index.aspx?trefwoord=zonnepanelen%20investeren&wanneer=5&wat=0&waar=1&sektie=ALL&intro=1 )

Annelies Deleersnyder

G7 ministers forced to think the unthinkable

Since the financial crisis approached into a critical phase last month, the Finance Ministers of the G7 needed to come up with a strong rescue plan to save the global system by thinking the unthinkable.
In contrast with earlier times, the G7 Finance Ministers no longer believe in the old purist approach, which believes in a ‘creative destruction’ and at the last reunion the free-market solution did no longer dominate the thought of nationalisation.
The G7 agreed on a rescue plan that will only have an international impact if there are 3 changes established concerning finance policy.
In case the chancellor’s plan doensn’t succeed to restore the confidence, there are only few possible solutions left to try to end this crisis. http://www.guardian.co.uk

Lara Alboort

EU agrees common action on banks crisis

European Union governments sought to put aside their differences on how to stop the financial whirlwind sweeping through Europe and announced agreement on a set of principles for rescuing troubled banks. EU finance ministers said that every country would be free to adopt measures ranging from recapitalization, the purchase of bank assets and state-backed guarantees of bank liabilities, but they failed to establish clear guidelines for protecting the bank savings of individual depositors. Some country’s had different views on how to rescue the troubled banks and there was also a lot of discussion about capital injection. But now the finance ministers agreed on seven principles of government action in bank rescues. The ministers agreed that all member-states would, for an initial period of at least one year, provide deposit guarantee protection for individuals for an amount of at least €50,000, acknowledging that many member-states are determined to raise their minimum to €100,000.

Lien Callebaut

Bron: http://www.ft.com/world/europe/brussels

Bling Bling

The financial crisis feeds people’s interest in gold as a safer investment than stocks and shares. The gold demand all over the world is so big that gold sellers can’t keep up with it.
Besides international speculators, also ordinary people want to get their hands on golden coins and bars. Afraid of their money to vanish, they exchange piles of cash for gold, hoping it’s safer to have gold in a safe than money in a bank.

Tim De Baets

(source: BBC: http://news.bbc.co.uk/2/hi/europe/7663753.stm)