Get ready for a rough day in the markets

By Edward Harrison On Oct 6, 2008

On the heels of weekend trouble at European banks, markets in Asia and Europe are selling off this morning. At the weekend, we learned that Hypo Real Estate, a finance behemoth in Germany with $700 billion in assets was feared to collapse. Later the German government rescued the bank and guaranteed all German private savings deposits, a sum the German blogger egghat informed me amounts to 568 billion euros (update 6 OCT 2008 1130 ET – the Bundesbank now claims this figure is $1,6 trillion).

The French and Belgians stepped into the European meltdown breach as well selling the Belgian-Luxembourg portion of failed Dutch-Belgian Fortis to French bank BNP Paribas. Whether this will count as a bankruptcy in the Credit Default Swaps market, I do not know.

And Denmark got into the act as well, guaranteeing all bank deposits.

Nevertheless, stock markets, at a minimum, are getting hammered. I haven’t looked at the credit markets yet. The FTSE in London is down over 3%. The DAX in Germany is down over 5%. The CAC-40 in Paris is also down over 5%. In Asia, the Hang Seng, the Nikkei and the Straits Times indices all closed down over 5%. And Dow Futures are trading down over 250 points right now.

So, brace yourself for a rough ride today. It could get ugly.