Fallout from investments in the United States, subprime debt, and commercial paper has spread around the world. Some countries are feeling the impact as infection in the US has spread to the real economy around the world.
Profits at Dutch-Belgian banking group Fortis halved in its fourth trading quarter after a worse-than-expected 1.5 billion (£1.15bn) subprime-related write-down.
In Canada it was said “The inevitable conclusion is that the current Canadian real estate market is floating on a sea of unrepayable, and perhaps unserviceable, debt.” (credits)
In Germany the Dresdner Bank subsidiary reported about 1.7 billion euros ($2.6 billion) of home-loan writedowns, more than larger German rivals Deutsche Bank AG and Commerzbank AG.
China’s export-oriented companies will face a demand drop affected by the US subprime mortgage crisis, a senior banking official said on the sidelines of the parliamentary session.
How about UBS and Switzerland? Some analysts think the real world will now see actual problems as a global recession begins.
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Billionaire investor Warren Buffett said yesterday that the US economy was in recession and that stocks were “not cheap” despite recent declines.
Buffett also said he was no longer offering to guarantee US$800 billion of municipal bonds backed by MBIA, Ambac and FGIC, three bond insurers that ran into trouble from backing riskier debt. Speaking on CNBC television, Buffett said the economy was heading south even though gross domestic product had not yet fallen for two straight quarters, a definition commonly used to identify a recession.