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Europe’s Banking Crisis Leaves EU Scrambling to Avoid Repeat of 2008 Crash

Top financial institutions in Europe have hardly been more vulnerable to an economic tremor, a situation worsened by the collapse of the German credit market as Berlin suddenly stopped issuing new debt.

Europe’s top financial institutions are teetering on the edge of collapse as access to high quality debt products have created a liquidity freeze rendering many institutions near insolvent according to the European Union stress test that assesses each bank’s ability to withstand the shock of a global economic slowdown.

The Bank of England rushed in to reassure global markets that UK lenders remain in a strong position to weather global financial shocks, but the rest of Europe may be in for more than its fair share of turbulence.

The European Banking Authority (EBA), an EU institution, coordinated the test of 51 lenders from across the bloc expressed concern in the wake of the test noting that most of Europe’s banks are not properly situated to withstand a major market event.

Coming in with one of the worst stress test results was perhaps the most systematically important financial institution in Europe, Deutsche Bank. The financial institution saw a 98% plunge in its annual profits sparking concern that it may be the Lehman Brothers of 2016 creating a domino effect infecting the assets of the global financial system.

However, as bad as the news has been for Deutsche Bank, the prize for the most vulnerable financial institution in Europe went to Italian lender Banca Monte dei Paschi di Siena (BMPS), the world’s oldest bank. BMPS is reportedly loaded with toxic loans and mortgages and in the event of an economic downturn the institution’s capital ratio would dip into negative territory – or bankruptcy.

Although Europe’s banks appear shaky enough that a light summer breeze could knock them over, economic analysts wonder whether macroeconomic headwinds will persist turning the danger into a tragedy.

The shock that crushes Europe’s financial sector may not be the start of worldwide recession – although Britain’s post-Brexit economic output looks dreary, China is surviving on a flood of stimulus spending, and the United States GDP growth was an uninspiring 1% in the last quarter – but instead the sudden drying up of German debt markets which means overleveraged financial institutions cannot access capital to cover bad bets.

The European Central Bank largely created the dry up in the credit markets through its Quantitative Easing stimulus program fueled by the purchase of German government bonds to infuse new liquidity into the financial markets, but Germany has halted borrowing and the ECB is blocked by its own rules from purchasing other bonds that are below benchmark interest rates, reports Die Welt.

Authorities pay Swedish youngsters to play with migrants and 'refugees"

Swedish authorities have started paying Swedish youths to spend time with migrants and “asylum seekers”, in a desperate attempt to show that integration and multiculturalism can work.
“It is sad that they have to pay as we’ve been doing fun things too, it has not been hard work,” participant Magdalena Hautala told SVT.

Around 50 Swedish-born youngsters, aged 14 to 15-years-old, are being paid 50 Swedish Krona ($6/£4.50) an hour to mingle with the new, mainly Muslim, arrivals.

In the first week of the trial, in the town Svenljunga, about an hour from Gothenburg, the teenagers are said to have learnt about democracy, equality, and prosperity.

“You can’t just turn things on, but we see it as these young people are doing a very important job in teaching about their cultures and gaining a greater understanding of each other,” said project manager Kristina Sune Fire.

“Compensation is still a good enticement,” she added.

Sweden welcomed more than 190,000 migrants and “refugees” last year – more per capita than any other European nation.

The vast majority were young men, and the unemployment rate among foreign-born men aged 18-24 years sits 41 per cent.

The young migrants participating in the scheme in Svenljunga do not have work permits and receive income support payments from the government.

In the first week, they were treated to a free trip to the Liseberg amusement park where they went canoeing on the water “learn to cooperate in and with nature” and stayed with a scout troop in a wooden cabin.

Aian Houseen, from Somalia, has been in Sweden for three years and said the trip had been a great success and she now has five Swedish friends.

“I was not afraid. I think it’s good to care about someone from another country. All are equal,” she said.

Magdalena Hautala agreed. “I thought it would be more difficult to make contact, but I have discovered that we are all young and are interested in the same things and laugh at the same things,” she says.

Adding: “You understand each other easily even if they come from a different culture.”

Turkey-EU Refugee Deal Dead as Ankara Demands Visa-Free Travel or They Walk

On Sunday, Foreign Minister Mevlut Cavusoglu told German daily newspaper Frankfurther Allgemeine Zeitung (FAZ) that "if there is no visa liberalization, we will be forced to distance ourselves from the (migrant) readmission agreement."

The Minister also required the European Union to provide a set time for visa-free entry saying that "it can be the beginning or the middle of October, but we expect a firm date."

The agreement for Turkey to take in as many as 1 million additional Syrian refugees in return for substantial financial compensation and a fast-track approach to the country’s accession into the European Union has long rested on the issue of Visa-Free travel for Turkish citizens.

Conditions on the ground have fundamentally changed since the agreement was first penned on March 18 at the behest of German Chancellor Angela Merkel, herself under siege by domestic opposition to her “open door” policy that has seen some 2 million war refugees flood into the country.

Since the agreement, Turkey has faced a number of major security incidents including the terror attack at Istanbul’s Ataturk International Airport and the failed coup attempt of July 15. Europe’s mood towards cooperation with Turkey, which was already a good deal wanting, has all but collapsed in the wake of the post-coup purge that has seen over 60,000 soldiers, police officers, teachers, and judges forced to resign from their positions.

Additionally, some 18,000 individuals have been arrested in the aftermath of the coup and have been forced to reside in prison conditions that have raised alarms for international human rights groups.

The situation between the West and Ankara has further devolved in recent weeks with the Erdogan regime bombarding the United States and NATO forces with repeated claims that they aided and abetted purported coup leader US-based Turkish cleric Fethullah Gulen.

The original deal also faced considerable scorn from the human rights community in that it calls for Europe to keep those refugees who can provide in a skilled-labor economy while relegating migrants lacking specialized training to questionable conditions in Turkish camps with sporadic reports that Ankara has forced hundreds of refugees back to Syria to die.

At the time of the agreement, former British Prime Minister David Cameron scoffed at the notion that Turkish residents would receive visa-free travel and EU membership asserting that they would not be prepared to be a part of the European Union for at least another thousand years.

In the wake of the coup, the security situation inside of Turkey is such that the cost-benefit for Europe of admitting Turkish residents without a visa requirement has fundamentally shifted with the EU bound to worry whether opening their border to Ankara may, in fact, increase the threat of terror.
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