With the Bank of England ploughing 50 billion pounds worth of funds into the banking system the credit crisis has taken another significant turn and the question is now, is it enough? Already City experts are predicting the eventual funds will reach £100
billion! The Government have made some unclear statements about if the Bonds swap for the banks mortgages will eventually be paid for by the tax payer! They have fallen short of making any promises and that might be an indicator that further measures can not
be ruled out and in the end the tax payer will have to take some if not all of the financial burden.
The Royal Bank of Scotland have yet to announce if this added liquidity into the interbank system will deter their own salvation a "Rights Issue". If the Rights Issue goes ahead we can assume that 50 billion is not enough. At least for RBS!
Whatever the UK Government try's to do to stem the tide of this crisis it's very unlikely to be enough unless it forms part of a Pan European strategy and has equilibrium with measures taken in the USA. A global financial crisis demands global responses
and these must be balanced and coordinated to achieve maximum affect and reach the desired result.
The next few months are going to see the emergence of the depth of the credit crunch and I fear there is more bad news to come. The eventual global solution may require the assistance of India and China as key participants as the economies in the west are
becoming increasingly dependent on the East.
India has quickly become an extremely wealthy and powerful force in financial markets while China has become a very demanding economy in its own right as its population realises that the Western lifestyle is now within their grasp.
It's an odd world when the USA as the most powerful country in the world must now rely on the East to drag its self out of a recession that could quite easily be long lasting and even go into a depression. This is not the time to play politics however, as
the world needs a stable economy and wealthy people in rich nations to enable the wealth to be distributed to countries less fortunate and with people in desperate need of aid. Kind of puts your mortgage worries into perspective!