'The Bank of England moved to pump £5bn into frozen money markets today as London's leading shares tumbled on the latest impact of the credit crunch.
Policymakers made the move to ease overnight lending rates between banks spooked by the bail-out and the cut-price sale of troubled investment bank Bear Stearns.
London's FTSE 100 Index fell more than 2.5 per cent as leading banks such as Halifax Bank of Scotland and Barclays bore the brunt of the sell-off.'
They never wanted to play, and nor did they ever think they'd have to. Against their will, America's economic policymakers have become engaged in a terrifying game of Russian roulette. The US financial system is in danger of melting down. This may not be the most probable outcome. Equally, though, a bullet through the head is not the most likely ending to a game of Russian roulette. Unless you're mad, though, it's not a game you'd volunteer to play.
Friday's bail-out of Bear Stearns, the US investment bank, brought to a close a remarkably frenetic week in financial markets. Bear Stearns' president and chief executive, Alan Schwartz, said on Thursday "our balance sheet has not weakened at all. We don't see any pressure on our liquidity". A day, it seems, is a long time in financial markets.
Margareta Pagano
The Independent
March 16, 2008
Wall Street is bracing itself for another week of roller-coaster trading after more than $300bn (£150bn) was wiped off the US equity markets on Friday following the emergency funding package put together by the Federal Reserve and JPMorgan Chase to rescue Bear Stearns.
One UK economist warned that the world is now close to a 1930s-like Great Depression, while New York traders said they had never experienced such fear. The Fed’s emergency funding procedure was first used in the Depression and has rarely been used since.
A Goldman Sachs trader in New York said: “Everyone is in a total state of shock, aghast at what is happening. No one wants to talk, let alone deal; we’re just standing by waiting. Everyone is nervous about what is going to emerge when trading starts tomorrow.”
Read More...AP
Global markets plunged Monday on news that JPMorgan Chase, backed by the U.S. government, had to rescue troubled Bear Stearns and investors struggled to gauge how much worse financial markets could get.
“Its difficult to call where the bottom is,” said Richard Hunter, a broker at Hargreaves Lansdown in London.
