The credit crunch: Saving the system

At last a glimmer of hope, but more boldness is needed to avert a global economic catastrophe CONFIDENCE is everything in finance. Until this week the politicians trying to tackle the credit crunch had done little to restore this essential ingredient. In America Congress dithered over the Bush administration’s $700 billion bail-out plan. In Europe governments have casually played beggar-my-neighbour politics, with countries launching deposit-guarantee schemes that destabilise banks elsewhere. This week, however, saw the first glimmers of a comprehensive global answer to the confidence gap. One clear sign was an unprecedented co-ordinated interest-rate cut on October 8th by the world’s main central banks, including the Federal Reserve, the European Central Bank, the Bank of England and (officially a coincidence) the People’s Bank of China. Various continental European countries also set about recapitalising their banks. But the most astounding developments were in America and ... (link)