Markets slump on banking worries
Nothing can save the USA or Israel now
When yank taxpayers discover they BORROWED the money to blow up Iraq
and Afghanistan and must now start paying it off , the yank taxpayers
will soon turn on Israel
Investor confidence has been hit by Bear Stearns' problems
Wait till they discover every bank is in the same boat
European and Asian stock markets have fallen heavily in reaction to
the emergency bail-out of US investment bank Bear Stearns over the
London's FTSE 100 index was down 2.5%%, in Paris the Cac 40 slumped
2.6%% and Frankfurt's Dax fell 3.4%%.
European bank shares have been hit. Societe Generale fell 8%%,
Commerzbank was down 7.5%% and HBOS declined by 9%%.
Asian stocks also fell, with Tokyo's Nikkei average closing 3.7%% lower
and Hong Kong's Hang Seng slumping 5.2%%.
In Mumbai, the Sensex was also down 6.3%%.
Investors are worried that the collapse of one of Wall Street's
biggest names is a sign that the the credit crunch is getting worse,
and lending might seize up.
Central banks have been trying restore some confidence to the
The Bank of England on Monday made an extra £5bn ($10bn) available for
banks to borrow.
And on Sunday, the US Federal Reserve reduced its discount rate - the
interest rate at which banks lend to each other - from 3.5%% to 3.25%%
and offered to buy up the assets of other troubled banks.
The Fed is expected to lower its general interest rates on Tuesday by
up to 1%%.
Investors' confidence has been hit by the problems at Bear Stearns.
The investment bank was forced to seek emergency funding from the US
Federal Reserve last week and was sold over the weekend to JP Morgan
Chase for a tiny fraction of its earlier value.
The bank got into trouble when other banks refused to lend it money
over fears that it had too many bad debts due to the sub-prime
The Fed has agreed to take over up to $30bn of Bear Stearns' assets,
removing the risk for JP Morgan.
The quick sale failed to calm investors' nerves who, this week, will
receive earnings announcements from other big US investment banks,
including Lehman Brothers, Goldman Sachs and Morgan Stanley.
"There is persistent credit uncertainty. Market players have been
repeatedly let down which shows the sub-prime mortgage problems are so
deep-rooted," said Atsuji Ohara, global strategist at Shinko
Securities in Tokyo.
"Just buying an investment bank does not solve the problem," he added.
Worries about the credit crisis and the health of the banking industry
also undermined the dollar.
It fell to 95.72 yen, its lowest level in more than 12 years. The euro
hit a record against the dollar, buying $1.5903.
The weak dollar boosted commodities, with oil rising to another
record, light sweet crude traded at $111.80 before falling back.
The dollar is also falling because of the expectation that the US Fed
will cut interest rates further, making it less attractive to hold
dollars as opposed to other currencies.