Unrelenting Mess

It seem that by early  yesterday morning session Wall Street will decouple itself from the bad day of Asian bourses with a September rebound in new homes sales. But in the afternoon U.S. stocks are slammed again at the close to end sharply lower. See the chart of intraday S&P 500.

The EURUSD was steadier during the Asian session but fall on the wayside during the European trading period and recovered at American trading time and closed lower than the previous day. See the daily chart of EURUSD below.

Heavy buying by a Swiss bank has helped carry EUR/US through the 1.25 level during the early US session.

The financial crisis spreading through the former Soviet bloc is setting up  a second  banking crisis in Western Europe, tipping the whole Continent into a fully-fledged economic slump.

A few of analysts rated the upcoming banking crisis in Europe to be the biggest currency crisis the world has ever seen.

The latest data from the Bank for International Settlements shows that Western European banks hold almost all the exposure to the Eastern Europe  market bubble..

They account for three-quarters of the total $4.7 trillion £2.96 trillion) in cross-border bank loans to Eastern Europe, Latin America and emerging Asia extended during the global credit boom – a sum that vastly exceeds the scale of  current US credit problems.

Iceland’s financial difficulties foretaste of what the crisis may mean. Iceland’s demise has left them nursing likely losses of $74bn (£47bn). The Germans have lost $22bn.

Austria’s bank exposure to emerging markets is equal to 85pc of GDP – with a heavy concentration in Hungary, Ukraine, and Serbia – all now queuing up (with Belarus) for rescue packages from the International Monetary Fund.

Exposure is 50pc of GDP for Switzerland, 25pc for Sweden, 24pc for the UK, and 23pc for Spain. The US figure is just 4pc.

Spanish banks alone have lent $316bn to Latin America, almost twice the lending by all US banks combined ($172bn). 

The low interest rate in US and Japan sat out the emerging market credit boom. The lending spree was followed eagerly by the Europeans – often using dollar and yen balance sheets, adding another ugly twist as global “deleveraging” causes the dollar and yen shot upward.

Note: This was written during lunch break of Bursa Saham Malaysia.

The morning session, Asian bourses was badly wacked especially the Bursa Malaysia and Singapore exchange.

It seem that the financial crisis is far from over or in fact is not yet stabalised.

Mr. Limp.....catch any falling durians?..ouch..ouch  ouch...