Global Economic News

Netherlands' DSB Bank Goes into Receivership

Oct. 12 (EIRNS)—A medium-sized Dutch bank, DSB Bank, went into government-ordered receivership today, putting a freeze on all of its deposits. NRC Handelsblad, the leading Dutch financial daily, claims the bank's failure wasn't because of the "credit crunch." Nonetheless, there had been a run on DSB's deposits, in which one-sixth of its EU4.3 billion euros in deposits were withdrawn. DSB Bank was a sort of Internet bank that made subprime mortgages that started going bad. Sound familiar?

Dutch Finance Minister Wouter gave a press conference today, in which he said the Dutch Central Bank decided to put the bank into receivership after an attempt to sell it to a consortium of larger banks failed, because they saw it as too high a risk. Two of these six potential purchaser banks, ABN Amro and Fortis, had themselves already been in bankruptcy, and were "saved" by a government bailout. The others have yet to admit they are bankrupt.

The run on DSB was helped by a campaign by Pieter Lakeman, of the foundation HypotheekLeed (Mortgage Suffering), who, on Oct. 1, said it was best for depositors to take their money out, because it was going bankrupt.

Italy: Industrial Energy Consumption as Indicator of 'No Recovery'

Oct. 13 (EIRNS)—Italy's gas consumption dropped 12% in the first eight months of 2009, in comparison to 2008, showing that there is no industrial recovery taking place. Gas accounts for 57% of electricity produced in Italy; thus, it is a good indicator. The situation has reversed from two years ago, when there was a supply crisis. This year, Italy may sell gas to Ukraine.

European Milk Farmers Gather for Protest Rally in Luxembourg

Oct. 17 (EIRNS)—On Oct. 19, about 3,500 milk farmers predominantly from eight countries, with 800 tractors, will stage a protest against the EU's milk price policy, in Luxembourg, where the agricultural ministers of the 27 EU member governments will meet. The farmers are from France, Italy, Germany, Belgium, Netherlands, Luxembourg, Austria, and Switzerland. The protesters do not want the EU300 million in "emergency aid" offered by the EU, they want a new agricultural policy that enables farmers to make a decent living. As things stand, the turnout of protesters may be higher than expected.

Feeder events were held through the past week. Germany: in Fulda (Oct. 15, with 100 farmers), and Koblenz (Oct. 13, with 150 farmers). France: in Metz (Oct. 16, with 1,000 farmers), and in many other cities, with altogether 40,000 farmers taking part yesterday.

As in France, so also in Germany, the incomes of farmers, especially milk farmers, have dropped drastically during the past 12 months. Although this year's harvest is a good one, the income situation is disastrous, because "market prices" have been speculated down: wheat yields only EU110 per ton (250 in 2008), barley only EU120 (300 in 2008), rape seed only EU240 (360 in 2008). For every liter of milk produced now, a German farmer adds 10 cents of his own money, because he can sell it to the dairies for only 20 cents, whereas it costs him 30 cents to produce it. The deficit in milk has to be compensated by whatever revenues there are (if any) from other farm products. The monthly per-capita income of a German farm family is down to EU1,000 now, compared to EU2,300 a year ago. It is not ruled out that one-third of milk farms and 20% of general farms will not exist a year from now, under these conditions.

Days of Labor Protest in Stuttgart Region

Oct. 17 (EIRNS)—The German metalworkers union, IG Metall, staged a week of action in the region around Stuttgart, the state capital of Baden-Württemberg, sounding the alarm over the increasingly dramatic situation in the machine-building belt there, which, at one of its centers, the city of Esslingen, employs 40% of the entire workforce in machine-building firms. This overlaps with the automobile supply sector.

Eight hundred workers of the Index-Traub machine-building firm took to the building of the Baden-Württemberg state bank (LBBW) yesterday, calling attention to the threat that of the 2,000 employees, 1,000 are faced with layoffs, because the firm cannot pay the fixed expenses any longer for its workers who are working short hours. Without state action, that is, a regional "umbrella" program of bridging loans coming from LBBW, these and many other jobs in the region will be gone.

The protest is backed also by the managers of the firms, who complain that the private banks receive capital from the European Central Bank at 1% interest, but hand out loans—if at all—to the Mittelstand (small and medium-size businesses) only at two-digit rates. Two days ago, workers from the Heller machine-building firm in Nürtingen were in Stuttgart to protest, and workers from Stuttgart firms were there Friday.