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Bourses And Banks On Guard

  • December 21st, 2007
  • Posted by EUEditor

euro-symbol-reduced7.jpgChristmas cheer is a little lacking in the closing stages of 2007 on stock markets as the industry considers impacts of the “sub-prime” crisis and portents for 2008.

This week saw heavy write-downs on debt by leading investment bankers, e.g. Bear Stearns, Citigroup or Morgan Stanley, as stock-markets ended an uneven, limping recovery from the big falls during last August, (see EUAustralia, 11,15,18, 26.8.07).

In the last week the European Central Bank (ECB), and the central banks of England, Canada and Switzerland made available loans of $US100-billion (A$116-billion;, 21.12.07) to banking companies; that followed moves in which the ECB offered $US500-billion (A$580-billion), the Bank of England $US10-billion (A$11.6-billion), and the US Federal Reserve $US20-billion (A$23-billion).

Analysts observed that bank-to-bank interest rates stayed rather high nevertheless, reflecting unease about continuing exposure to debt; fueling talk of possible inflation and negative impacts on the “real economy” in 2008.