Brown moves to head off new banking crisis

[TomClash]

Source: The Independent

The Prime Minister, Chancellor and Governor of the Bank of England are thrashing out the details of another emergency package this weekend to shore up the banking system and get credit moving through the economy.

Treasury officials said yesterday that Gordon Brown, Alistair Darling and Mervyn King are looking at options ranging from introducing "quantatitive easing" – printing money – through underwriting or insuring the toxic assets of the UK's banks, to full-scale nationalisation. Speculation that the Government is set to create a "toxic bank" to isolate all the sector's bad debts was, however, played down by the Treasury because of the complexities.

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The latest crisis has been sparked by renewed worries of a secondary banking collapse in the US following Washington's emergency $140bn (£95bn) rescue package for Bank of America and concerns for Citigroup.

This prompted sharp falls in the shares of Barclays and Royal Bank of Scotland as investors feared that the UK banks had greater problems than already exposed and that there would be new calls for fresh capital.

After a 25 per cent fall in its shares late on Friday, Barclays took the unprecedented step of previewing its figures for 2008 two weeks early. It said profit before tax, after costs and impairment (bad debts), would be well ahead of the £5.3bn consensus. A senior Barclays director said that the bank had no intention of raising new capital or turning to the Government for help. But he added that if there were further problems, Barclays would either sell more assets or shrink its balance sheet.

A forecast from a leading economist this weekend that Britain is set to suffer its biggest fall in growth since 1946 will further undermine confidence. Peter Spencer, chief economist at the Ernst & Young Item Club, predicts gross domestic product will contract by 2.7 per cent in 2009 and fall by a further 0.5 per cent next year.

He also predicts consumer spending will decline by 2.5 per cent and house prices will fall another 22 per cent this year.

more . . .

Read more: http://www.independent.co.uk/news/business/news/brown-moves-to-head-off-new-banking-crisis-1418565.html

[xchrom]

1. yikes. nt

[Warren Stupidity]

2. Ok now. So round one has failed.

Looks like the plan for round two is: repeat round one.

[TomClash]

3. Toss more money at it

I think that's it if this doesn't work.

[conspirator]

4. FUCK brown and his policies. The pound is now toilet paper.

My bank savings lost 33% of their value against the euro and the dollar.
There is no point saving any money in this country. This is starting to look like Iceland or Zimbabwe.