Britain offers its biggest retail banks £50 billion injection
Britain yesterday offered to pump up to £50 billion (€64.38 billion) into its biggest retail banks to help them survive the worst international financial crisis since the 1930s. British Prime Minister Gordon Brown said the global financial market had...
Britain yesterday offered to pump up to £50 billion (€64.38 billion) into its biggest retail banks to help them survive the worst international financial crisis since the 1930s.
British Prime Minister Gordon Brown said the global financial market had ceased to function after bad debts, stemming from a collapse in the US housing market, poisoned the system.
The Bank of England also joined the US Federal Reserve in cutting interest rate by 50 basis points to 1.5 per cent. China, the European Central Bank (ECB) and central banks in Canada, Sweden and Switzerland also cut rates in the coordinated response which analysts had been demanding.
World stock markets cut heavy losses after the move.
The dollar fell further versus major currencies and US Treasuries rose. German government bond futures wiped out gains, while European bank shares turned positive.
"At last they all woke up!" Bank of America rates strategist Riccardo Barbieri-Hermitte said.
Hong Kong had earlier followed Australia's lead in slicing a full point off its interest rates amid increasingly strident calls for a coordinated, global monetary policy response.
The US approved a $700 billion (€515.96 billion) package last week to rescue its ailing banks - although its stock market continues to plunge - and governments across the globe are now pushing ahead with their own emergency measures.
"There is a failure of responsibility by many in the banking system," Mr Brown told a news conference. "It has become a problem in the whole banking system, we have got to deal with it."
Shares in Europe and Asia plunged on fears that frozen money markets will stall business activity and send industrialised nations spiralling deep into recession.
Shares in Tokyo lost more than nine per cent, the biggest decline since the 1987 stock market crash.
European shares tumbled more than seven per cent to five-year lows. US stocks had tumbled for a fifth straight session on Tuesday, completing a record five-day point loss.
"The deteriorating outlook for the economy and the deepening financial crisis are pushing fears to their limit," said Mitsushige Akino, chief fund manager at Ichiyoshi Investment Management in Japan.
Britain's offer of £50 billion of public money to take stakes in some of its best known high street banks follows a slump in which some have lost nearly half their value on the stock market amid investor fears they could collapse.
In an effort to kick-start stalled money markets, the Bank of England will offer at least £200 billion in short-term lending. Britain is also guaranteeing up to £250 billion to help banks refinance debt.
The cost of borrowing sterling on interbank money markets eased slightly yesterday after the British move. The Bank of England delivers its latest interest rate decision today and Chancellor of the Exchequer Alistair Darling dropped a heavy hint he would welcome a rate cut.
"Let me remind you of the remit - yes it's to target the government's inflation target, but it's also to support the government's wider objectives of economic stability," he said.
The crisis has caused turmoil in once flourishing economies.
Facing financial meltdown, Iceland has taken over two of its largest banks - Landsbanki on Tuesday and now Glitnir - and is seeking a €4 billion loan from Russia.
In the latest sign of gloom, corporate bankruptcies in Japan jumped 34.5 per cent year-on-year, a research firm said.
A company source said carmaker Toyota Motor Corp. may cut its annual profit outlook on sluggish global demand and a weaker yen.
US presidential candidates John McCain and Barack Obama sparred over taxes and the economy on Tuesday in Tennessee, during a head-to-head debate ahead of the November 4 election.
"Americans are angry, they're upset and they're a little fearful," said Mr McCain, a Republican senator from Arizona. "We don't have trust and confidence in our institutions."
Mr Obama, a Democrat senator from Illinois, said the financial crisis was aided by financial deregulation supported by Mr McCain and Republicans. He said middle-class workers, not just Wall Street, needed a rescue package that would include tax cuts.
"We are in the worst financial crisis since the Great Depression, and a lot of you, I think, are worried about your jobs, your pensions, your retirement accounts," Mr Obama said.
British Prime Minister Gordon Brown said the global financial market had ceased to function after bad debts, stemming from a collapse in the US housing market, poisoned the system.
The Bank of England also joined the US Federal Reserve in cutting interest rate by 50 basis points to 1.5 per cent. China, the European Central Bank (ECB) and central banks in Canada, Sweden and Switzerland also cut rates in the coordinated response which analysts had been demanding.
World stock markets cut heavy losses after the move.
The dollar fell further versus major currencies and US Treasuries rose. German government bond futures wiped out gains, while European bank shares turned positive.
"At last they all woke up!" Bank of America rates strategist Riccardo Barbieri-Hermitte said.
Hong Kong had earlier followed Australia's lead in slicing a full point off its interest rates amid increasingly strident calls for a coordinated, global monetary policy response.
The US approved a $700 billion (€515.96 billion) package last week to rescue its ailing banks - although its stock market continues to plunge - and governments across the globe are now pushing ahead with their own emergency measures.
"There is a failure of responsibility by many in the banking system," Mr Brown told a news conference. "It has become a problem in the whole banking system, we have got to deal with it."
Shares in Europe and Asia plunged on fears that frozen money markets will stall business activity and send industrialised nations spiralling deep into recession.
Shares in Tokyo lost more than nine per cent, the biggest decline since the 1987 stock market crash.
European shares tumbled more than seven per cent to five-year lows. US stocks had tumbled for a fifth straight session on Tuesday, completing a record five-day point loss.
"The deteriorating outlook for the economy and the deepening financial crisis are pushing fears to their limit," said Mitsushige Akino, chief fund manager at Ichiyoshi Investment Management in Japan.
Britain's offer of £50 billion of public money to take stakes in some of its best known high street banks follows a slump in which some have lost nearly half their value on the stock market amid investor fears they could collapse.
In an effort to kick-start stalled money markets, the Bank of England will offer at least £200 billion in short-term lending. Britain is also guaranteeing up to £250 billion to help banks refinance debt.
The cost of borrowing sterling on interbank money markets eased slightly yesterday after the British move. The Bank of England delivers its latest interest rate decision today and Chancellor of the Exchequer Alistair Darling dropped a heavy hint he would welcome a rate cut.
"Let me remind you of the remit - yes it's to target the government's inflation target, but it's also to support the government's wider objectives of economic stability," he said.
The crisis has caused turmoil in once flourishing economies.
Facing financial meltdown, Iceland has taken over two of its largest banks - Landsbanki on Tuesday and now Glitnir - and is seeking a €4 billion loan from Russia.
In the latest sign of gloom, corporate bankruptcies in Japan jumped 34.5 per cent year-on-year, a research firm said.
A company source said carmaker Toyota Motor Corp. may cut its annual profit outlook on sluggish global demand and a weaker yen.
US presidential candidates John McCain and Barack Obama sparred over taxes and the economy on Tuesday in Tennessee, during a head-to-head debate ahead of the November 4 election.
"Americans are angry, they're upset and they're a little fearful," said Mr McCain, a Republican senator from Arizona. "We don't have trust and confidence in our institutions."
Mr Obama, a Democrat senator from Illinois, said the financial crisis was aided by financial deregulation supported by Mr McCain and Republicans. He said middle-class workers, not just Wall Street, needed a rescue package that would include tax cuts.
"We are in the worst financial crisis since the Great Depression, and a lot of you, I think, are worried about your jobs, your pensions, your retirement accounts," Mr Obama said.