Problems in Europe

The ripple effect is starting to hit Europe. Yesterday the European governments stepped in to rescue Fortis, Bradford & Bingley Plc, and Hypo Real Estate Holding AG. This came just hours before the U.S. Congress failed to agree to the $700 Billion Bailout package. The tightening credit situation is hitting everyone and with it economies will also be hit. One thing I have posted about before is how I feel that the U.K. could get hit pretty hard since their mortgage markets is basically all set with variable rates. Also ther Real Estate market in the U.K. was crazier then it was here in the States. I was discussing this with a few co workers yesterday and was informed that in the U.K. if you walk away from your mortgage the government can come after you and take your car, savings etc etc. This limits the chances that someone will walk away. If this is true (I am trying to get confirmation) then it would certainly lesson the chances that someone would up and walk away, well at least just a little.

The ECB has said it will add more funds to the banking system through year end. They will do so with "Special Auctions". They just doubled the size of the currency swap to $240 billion dollars to make more dollars available to the market.

All in all not a pretty picture, and I think it is best to stay as much on the sidelines as is possible with your trading.


Good Luck and Good Currency Trading.