A further alternative perspective: It is the crudest Keynesianism to view the Paulson Plan as an injection of capital or “liquidity.” That money has to come from somewhere. If it is taxed or borrowed, then it is just a shell game; the liquidity is drained from elsewhere, to be injected […]
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FT.com: Building societies angry at B&B liabilities
But just one moment: …the government hammered out a deal with the Spanish bank Santander, which will buy the embattled UK mortgage lender’s £20bn deposit book and 197-branch network for £612m. Santander, which already owns Abbey and is taking over Alliance & Leicester, will have 1,286 branches in the UK. […]
Read MoreGeorge Osborne’s brilliant speech
George Osborne’s message today was realistic and hopeful, full of promise, not just on the economy, but as a philosophy to renew Britain: Before us lies a tough task. Before us lie difficult decisions. We have shown the courage to face up to those in government before and we will […]
Read MoreBrown’s support for the US rescue plan
The BBC reports Gordon Brown’s clumsy remarks on the US rescue plan: “America and Britain have always stood together as one in times of difficulty and challenging times, and I have told President Bush today that facing global turbulence Britain supports the US plan,” he said. “Whatever the details of […]
Read MoreFT.com: Outline bail-out deal agreed
The FT reports that US legislators have reached “fundamental agreement” on the Bush administration’s $700bn rescue plan: Hans Jorg Rudloff, Barclays Capital chairman, said: “Anyone looking at the money markets would come to the conclusion that we are one minute before a terminal heart attack. Therefore the rescue package will […]
Read MoreFT.com: Banks fall despite short-selling ban
The FT reports* on the continuing sale of financial firms’ securities: A recent ban on short selling failed to halt the sell-off in the financial services sector in London on Tuesday as doubts about the effectiveness of a proposed $700bn US government rescue plan grew. Details of the plans for […]
Read MoreMises.org: “What’s Behind the Financial Market Crisis?”
As a result of the bailouts and the socialization of the mortgage agencies, the financial system is now fully infected with moral hazard. The disastrous effects of these government interventions will show up soon. The major task of bringing the capital structure in order is still ahead and more pain […]
Read MoreA Marxist comes out
John Cruddas MP at The Guardian: The future demands an active state redistributing wealth to balance a dysfunctional economy – the Labour Party’s founding principle. As I have written, our economic system has been subject to too much of the wrong state intervention, so capitalism cannot be blamed for a […]
Read MoreLloyds TSB and HBOS merge
The Guardian: A £12bn takeover of Britain’s biggest lender, HBOS, failed to halt the deepening crisis in world financial markets last night, as a wave of fresh speculation on global stock markets saw two of Wall Street’s most prestigious investment banks targeted as the latest victims of the credit crunch. […]
Read MoreFT.com: Lex on the AIG rescue
Lex reports on AIG’s rescue: AIG was not too big to fail, but too connected. Bankruptcy would have in effect cancelled the debt insurance that AIG provided, and triggered emergency capital raisings from counterparties around the world. The Fed’s rescue is on punishing terms, AIG must repay the $85bn loan […]
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