Record losses were being mirrored around the world as governments scramble to avoid any further disaster. Stock markets are now being driven by fear and not by reason. Record loses are being moved around the world. If you thought we might be hitting the bottom then think again there are new warnings being given hourly that this current financial situation is deepening. This affects all of us whether we are money saving experts or ordinary members of the public looking for a credit card consolidationloan, a debt relief plan or a secured homeowner loan or just a quick mortgage deal, we are all affected.
All the remedies being used by governments so far have failed to unblock the credit market. The US Federal Reserve Bank is now printing money; yes $700 billion to buy up the toxic debts in their back yard. This credit crisis is global and its effecting emerging economies, we are all in this together!
Governments around the world are desperately trying to unfreeze the money markets in order to get the banks lending money to themselves and the people. The Government solutions are now to buy shares in the banks, thereby partially privatising them when private investors are not willing to buy the bank shares. They are doing this in order to stop the banking system from collapsing altogether.
This morning Alistair Darling the Chancellor of the Exchequer, announced that half a million UK depositors in the I-Save, the Icelandic Bank would be recompensed by the by the British Taxpayer’s for any losses as Iceland has no funds in its compensation scheme with which to repay UK depositors. The Chancellor said these were exceptional times and his government would now step in and cover deposits of up to £50,000. This is amazing we are now covering foreign countries debts with our taxpayer’s money.
The Government says that we are in a Recession when we have had two full consecutive quarters of no growth for a recession to be acknowledged or recognised. Well the facts so are very evident as all the news channels are telling us that car sales are reported to be down by 25%; borrowers are unable to borrow money for loans or mortgages, some companies have now introduced a four day working week and unemployment is growing week by week.
The general rule of thumb for whether we are in a recession should be no economic growth or activity equals economy slowing down which equals RECESSION. The Global banking system is in Intensive Care on “Life Support” and the Governments around the world are continue to pump huge sums of taxpayer’s money into the banking system to help build confidence within the stock markets. While this may help the banking sector it is not a cure for the disease.
Finally, some great news the Prime Minister Gordon Brown has revealed that The Bank of England has today cut the UK interest rate by 0.5% and Alistair Darling has finally got around to kick-start the money markets. Alastair Darling also unveiled details of a £50 billion rescue package to prop up the banking system and a further facility of £350 billion for inter bank lending; to be used as liquidity to help unfreeze the banking problems and improve confidence in the market.
It is unfortunate that he has used taxpayer’s money to help secure the banking industry. We will all have to shoulder the burden of the interest rate costs for the money he has borrowed in our names from the bank of England to support the banks. I just wonder how helpful the banks will be in the future towards the public when they need help from their high street bank.
This may just be the antidote that is needed to hopefully cure the situation, but don’t expect to much as it will take months or maybe even years before we see whether this has worked. Your thoughts and comments are always welcome. Just click on the green coloured comment button below and leave your thoughts and views.