What will follow?
Peter Hoskin 9:04am
The credit crunch took its deepest bite into the US economy over the weekend, as the major investment bank Bear Stearns collapsed under the strain of massive debts. Shares that were worth $30 each on Friday were last night bought by JP Morgan for $2. In effect, it's the American Northern Rock, and it places massive question marks over the stability of other US banks.
The US Federal Reserve has moved quickly to shore-up confidence in the system – cutting the lending rate for banks from 3.5 percent to 3.25 percent, and introducing a new lending facility. The worry is that these drastic measures merely reveal how serious the situation is, and could instead catalyse widespread investor panic. Already, share prices have tumbled in Asian markets. Will the rest of the world follow?
Previous
William Norton
March 17th, 2008 9:36am Report this commentIt's the American Northern Rock. Yes....and that's why the Fed took 6 months flannelling around and messing up everything before nationalising it. Oh, they didn't. They spent a weekend helping another bank buy them. Gosh, why didn't we think of that?
Pete Hoskin
March 17th, 2008 9:47am Report this commentWilliam: yes, you're very right. It's the American Northern Rock insofar as it's a bank which collapsed because it basically ran out of money. However, the Fed's response to the Northern Rock-esque situation was far, far better than our Government's was to Northern Rock. Expect a post from Fraser on this shortly...
cityboozer
March 17th, 2008 10:09am Report this commentWould EU competition rules have allowed the BoE to sub Lloyds TSB 15bn to buy the Crock?
Back to top