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UK authorities set to announce £200 billion bank bailout

As speculation continues to mount about the forthcoming UK government bank bailout part two we are starting to see some of the terms and conditions leaked into the press. By all accounts the deal should be announced tomorrow after a late-night meeting yesterday between the government and the UK's banking leaders. This will be Gordon Brown's hardest sale yet as taxpayers will take on a liability approaching £200 billion. So how would it work?

The proposed bailout will see so-called toxic assets, i.e. assets which have the potential to cause serious losses, taken on by the government who will insure the banks against future loss. This government guarantee will enable the banks to lend more money in the money markets and borrow more money for their own services. There is a substantial risk to taxpayers as many of these toxic assets have already turned "bad" and are on the verge of imploding.

There is already growing criticism of the UK government's bailout plan as we have been here before with bailout part one which was supposed to be the ultimate liquidity package for the UK money market. Can Gordon Brown pull off this next trick and save the UK economy?

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