Economy goes down as usual

The downfall of the World Economy continues as usual. During last two days the shares of World's Banks have fallen drastically. Almost a half of the Exchange value of Banking industry on both sides of Atlantic has disappeared during last twelwe monts. The headlines of Taloussanomat tells of very negative expectations among Exchange Traders:

"The markets have punishded banking shares heavier than in last ten years. The lousy exchange rate tells of fears of Economic Doomsday on the both sides of Atlantic.

In last two days European and American banking shares have been beated down exceptionally heavily. Investors have thrown shares on sale as fast as possible.. [...]

European banking shares have lost more than half of their value in one year. DJ Stoxx 600 Banks index has fallen 51,4 percent in 12 months. The European banking index has fallen almost 46,6 percent in the same time."

The situation is alltogether so dark that FED director Ben Bernanke has had to say it loud that it doesn't look good at all:

"Bernanke: USA has a dark future"

"According to Ben Bernanke There are 'remarkable risks' in US Economy towards somewhat weaker growth. On other hand the risks of higher inflation have also risen."

The bad situation of the American housing lenders that crumble in the core of the crisis is also reflecting to Finland since Finnish banks have also invested on Fannie Mae and Freddie Mac loans: Link.

The worst direct threat for Finnish economy is the looming crash of Swedish housing markets:

"Proffessor Hans Lind thinks that the prices in Swedish housing market may crash down heavily. He says that e.g. the prices of residence-right flats may drop 30-40 percent. Finnish real estate experts though don't believe such drop could happen in Finland. [...]

..question in Sweden is no more if the prices of housing are going to come down, but rather we should think that how low they are going to drop."

The expectation that the Swedish housing price crash would not infect Finland is an illusion. There's no reason to hide your head in bushes. In last fall it was estimated that there's approximately a -30 -70 percent bubble in Finnish Real Estate prices, depending on location and type size of flat. I'd say that when the housing prices drop down in Sweden, the crash will spread to Finland too.