Europe's financial crisis

In Singapore, there seems to be less financial news about Europe than US. Most stuff recently is about the 'nationalization' of Citigroup and whether the government should fully nationalize it. Many bloggers (here and here as example) talk about GIC's converting of preferred stocks in Citigroup into common stocks and perhaps the impending doom of the investments. It seems like our national reserves are just shrinking day by day. More detailed analysis are provided by Lucky Tan. 

While all the storm seems to be brewing in the US, I will just like to make aware that there is a bigger problem in Europe. 

Banks in US are too big to fail. Banks in Europe are too big to save. The video below talks about how the crisis is in some sense bigger in Europe than in US. Good luck to the ECB to try and solve the crisis. Eastern Europe is going down. Western Europe may follow soon.

Excerpts from an article in Telegraph: Failure to save East Europe will lead to world-wide meltdown

In Poland, 60pc of mortgages are in Swiss francs. The zloty has just halved against the franc. Hungary, the Balkans, the Baltics, and Ukraine are all suffering variants of this story. As an act of collective folly – by lenders and borrowers – it matches America's sub-prime debacle. There is a crucial difference, however. European banks are on the hook for both. US banks are not.

Whether it takes months, or just weeks, the world is going to discover that Europe's financial system is sunk, and that there is no EU Federal Reserve yet ready to act as a lender of last resort or to flood the markets with emergency stimulus.

If one spark jumps across the eurozone line, we will have global systemic crisis within days. Are the firemen ready?

The answer is no.