See, when you have a flaw in the system, if everyone is part of the system, the system takes everything and everyone down with it. Globalisation turned out not to be such a great idea. The biggest losers of course are the rich nations that benefitted from it, and invested themselves the way they did through various financial gadgets. The poor third world are none the poorer - in fact, in relational terms, come out ahead.
"The European financial sector is on trial: we have to support our banks." said French President Nicolas Sarkozy. He has reportedly ordered the state investment arm Caisse Des Depots to shore up Dexia, even though the bank is based in Belgium.
Germany's Hypo Real Estate, a commercial property lender, was rescued with a €35bn lifeline from a consortium of local banks. The lender has $560bn in liabilities, almost as much as Lehman Brothers.
"The ECB is no longer able to inject liquidity because the money is just coming back to them again. This is extremely serious. If monetary policy is no longer working, there is a risk that the whole system will blow up in days," he said.
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clipped from www.telegraph.co.uk
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