The FTSE index has biggest one-day rise in its 24 year history

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Alan

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On the other side of the Atlantic, too, prices rocketed after the US government outlined its plan to rescue the ailing financial system.

The US Treasury Secretary said he intends to create a rescue fund, worth hundreds of billions of dollars, to cover the bad debts on US mortgages that are dragging down the financial system.

Henry Paulson said he will ask Congress to take action on legislation next week.

He also said he wants to update the financial regulatory system, but that would have to wait until the end of this "difficult period".

"I am convinced that this bold approach will cost American families far less than the alternative, a continuing series of financial institution failures, and frozen credit markets unable to fund economic expansion."

President Bush said: "This is a pivotal moment for America's economy.

"We must act now to protect our nation's financial health from risk."

He said government intervention was essential due to the precarious state of the financial markets.

US Treasury Secretary Henry Paulson has said the government needs to take additional steps to help boost the US financial market - but would have to get Congress' approval.

The US Treasury confirmed it will guarantee money market funds up to an amount of $50bn to ensure their solvency.

The country's financial regulator has also temporarily halted short-selling until October 2, following Britain's lead taken by the Financial Services Authority from midnight.

That came after the Prime Minister told Sky News that the behaviour of some City institutions had been 'irresponsible'.

US Treasure Secretary Henry Paulson has warned he was hatching a plan to rescue banks from the "toxic" assets that have led to the crisis.

New York's main share index responded by posting its biggest gain for nearly six years last night - up 410 points, or nearly 4%.

I think we need, at the very least, a return to good old, boring banking

Europe's central banks have offered up more cash to jittery banks, to boost confidence and persuade them to lend to each other.

The European Central Bank, which oversees the 15-nation euro zone, has offered $40bn. In London, the Bank of England said it provided nearly £20bn.

The FSA measures are designed to stop traders creating a lack of confidence in companies by selling shares, actively contributing to a fall in price from which they profit when they buy them back.

Halifax Bank of Scotland blamed the practice for wiping more than £3bn from its value before a takeover by Lloyds TSB reversed its fortunes.
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SKY

Quite a rollercoaster
 
gdiza said:
This is good I assume?
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Amost certainly a bad thing, I'm afraid.
Bad mortgages remain bad no matter who owns them. Shifting the burden to the general taxpayer is unjust, because it puts the burden on those who acted responsibly, ie the majority of homeowners who borrow responsibly and pay their bonds. It also lets the real culprits off the hook, which is another injustice.

So, good people carry the can, and bad people live to spread their poison.

Essentially what's happening is that governments are pledging future taxpayers' money to bail out the financially irresponsible (both lenders and borrowers). This depresses the productive and honest portion of the economy to shield the dishonest from the consequences of their irresponsible actions. This is not good. It is very bad, bad, bad. Parents who do that for their kids cripple them for life because it perpetuates irresponsibility. Societies balkanise and go to war.

Right now the state looks like a kind rescuing nanny. Soon it turns into a terrible tyrant, as history has repeatedly borne out.
 
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Another reason why it's bad: it deceives people into thinking things are OK and the problem's kinda solved.

It's not. Far from it. This is fuel on a much bigger but currently subterranean fire.
 
If this plan is like the Lehman one, it will mean the US is just buying all that debt. What good is that?
 
Cheap money caused all the trouble

Looking at this table it is evident to me that the trouble started just post Y2K.
The year 2001 was the chum and the year 2002 was the bait, that by 2003 the American public were caught hook line and sinker with cheap money.
Just look at the level on the 6th of November 2002 for instance!

People were borrowing like there was no tomorrow and the Federal Reserve was pumping the money into the Economy as it was needed.
The Federal Reserve steadily and meaningfully increases the interest rate vigorously over the next 3 years of 2004, 2005 and 2006. Now think, people borrowed money in 2002 for X%, but that X% has virtually gone up 500% or more peaking on the 29th of June 2006. Makes you think? Who is to blame here?

Well a combination of people and organisations, but who presented the juicy apples from the forbidden tree. The Federal Reserve of course.
Now that everything is in turmoil who does everyone turn to for relief? The same people that put them in the ***** in the first place. The Federal Reserve is now taking bad debt and making the Tax Payer foot the bill. Nice one, considering that the Federal Reserve is a private organisation with private shareholders, but is dictating to the US Government, Bush et al, that the US Government must now stand security. Well done.

Capitalism is a bugger, but it is the only system that works and prevents people from becoming stagnant and lazy. But every few years the whole thing is like a computer running Windows that needs a reboot to restart itself. Organisations like the Federal Reserve cannot increase the Money Supply ad infinitum, yet that is how Capitalism works. Money Supply in continuation - just keep pumping more and more money into the economy.
Just hope it doesn't break too often, well maybe every ten years or so.:p
 
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The Federal Reserve is not a creature or defender of capitalism. None of the central banks are. They were created by mercantilists and statists. They should be abolished, because they perpetuate the illusion that money is created or managed by governments.
 
At least some confidence has been restored. They got to quell the panic before things spiral out of control
 
Arthur said:
The Federal Reserve is not a creature or defender of capitalism. None of the central banks are. They were created by mercantilists and statists. They should be abolished, because they perpetuate the illusion that money is created or managed by governments.
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+1

Creating a never-ending spiral of debt for the man in the street.
 
all this propping up seems like it needs to be paid back at some stage..not how i intended to spend my childrens inheritance.

looks like it is just going to make the hangover worse in the long run.
 
Well they couldn't just let the whole economy go down the toilet could they
 
supersunbird said:
Luckily we are not Americans...
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They're in a much better position to weather the payback than we are ... SA and a goodly portion of ther planet will suffer far more than Americans. A smallish downturn in the US economy will hit us much harder because a far greater portion of our & our trading partners' economy is dependant on US-led demand.
 
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