Aug. 11, 2007 (LPAC)--The world central banks have poured $323 billion into the monetary-financial system in the last 48 hours, writes the British Guardian on the morning of Saturday, Aug. 11.
Screaming headlines in the British press read: "Central Banks Pour Billions-But Global Slide Continues," The Guardian; "City Hit by Biggest Crisis for a Decade," the Daily Telegraph; "World Markets under Strain of Credit Crisis," and "Dead Mortgages Create Global Panic," The Times.
The London stock market took a battering on Friday, with the FTSE 100 index losing 3.7%, wiping out over 64 billion pounds from leading shares ($130 billion). This compares with -10.84% in October 1987 and -5.72% on 9/11. Mining companies, hedge fund traders, and banks were hit hard. Big losers included Man Group, with 9%; mortgage lender Northern Rock, 9.6%; Lonim, 7%; BHP Billiton, 6.7%; Barclays Bank, 6.4%, wiping out 3 billion pounds of its market value.
The FTSE collapsed 232.9 points to 6038.3, prompting one trader to say, "This is absolutely unprecedented. In the last 15 minutes of trading we dropped 50 points. That's serious 'get me out, I don't want to be in this any more, I'm scared,'" according to today's Daily Telegraph.
Meanwhile the Bank of England has kept a low profile, saying nothing about injecting money. It does not have to make a decision because, according to the Guardian, it introduced a new money market system under which it has a permanent, unlimited standing facility available to commercial banks to draw on if they want to. The rate is, 6.75%, one percentage point above the going rate. But it is not known if it has been utilized yet, since announcements don't have to be made.
Prime Minister Gordon Brown, only last month Chancellor of the Exchequer, is quoted saying, "There will always be issues in the markets and of course we cannot insulate ourselves from events in all parts of the world. I think the important message about the British economy is that we have done everything in our power and will continue to do so to maintain the stability of the economy."
