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This was perhaps the worst kept secret in the financial markets as the Bank of England reduced base rates by 1% to a 50 year low of 2%. This is a drastic step although it was flagged only a few...
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Monday 15th September 2008
After a week in which markets have bounced on the back of the US mortgage bailout, today was the day when it all came crashing back down to earth with news that Lehman Brothers has filed for bankruptcy and the UK division is in administration. Quite how a bank with over 150 years of history, tradition and experience in investment markets could collapse at such break neck speed has left many mystified.
Stock markets this morning have reacted badly to the news with markets around the world showing falls of around 5% as the news filtered through overnight. Despite a last ditch attempt by a number of investment companies (such as Barclays Bank) to set up a rescue package it has all gone horribly wrong this morning. The US government’s reluctance to offer any kind of guarantee against future loses for the group seems to have scuppered any rescue attempt, but can you really blame them?
The US authorities are currently in the middle of taking Fannie Mae and Freddie Mac back under government control in order to save the US mortgage market from total collapse. There is sure to be more pain ahead in the immediate future with investors literally running for the exit this morning. The open on Wall Street this afternoon is vitally important with dealers praying that the sell off will not continue. |
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