Governments across Europe yesterday (Monday) took the first step in a new, coordinated effort to subvert the widening credit crisis and restore functionality to the markets by guaranteeing new debt and using taxpayer money to bail out troubled lenders all over the continent. The sweeping actions followed a pact reached Sunday by members of the European Union, most notably the United Kingdom, Germany, and France. “The steps taken in Europe are very positive,” billionaire investor George Soros told Bloomberg News. “The European governments have got religion and realized this is a serious problem they have to address.” The British government, which last week unveiled its own $87 billion bailout plan, spent $64 billion (37 billion pounds) for controlling stakes in three U.K. banks: The Royal Bank of Scotland Group PLC (RBS), HBOS PLC (OTC: HBOOY), and Lloyds TSB Group ...

The U.K. government yesterday (Wednesday) announced its own banking bailout package with an $87 billion (50 billion pound) recapitalization plan for the ailing British financial sector. “The global market has ceased to function,” British Prime Minister Gordon Brown said yesterday at a press conference in London. “The banking system must be sounder, and that is why we are putting the capital in.” Under the plan, the U.K. Treasury will provide $43.5 billion (25 billion pounds) to recapitalize banks and boost their Tier 1 capital ratio. A bank’s Tier 1 capital ratio is a key indicator of the firm’s financial strength. An additional $43.5 billion (25 billion pounds) will be available if needed. In addition, the Bank of England, the nation’s central bank, will increase the amount of funds available for short-term lending to $346 billion (200 billion pounds). The plan ...

“Finance is the art of passing money from hand to hand until it finally disappears,” said Robert W. Sarnoff. This is certainly the way it looked last week as the fall-out of the credit crisis deepened.

Markets had investors feeling dazed and confused after another roller-coaster week amid further evidence of the deteriorating health of the US financial sector and a renewed rise in oil prices. Adding to the pain, Barron’s Randall Forsyth said: “Now that the bear market has officially arrived, it may stick around and gnash its teeth for a while – until it’s scared away those who remain.”

Government Sponsored Enterprises (GSEs) Fannie Mae (FNM) and Freddie Mac

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By Martin Hutchinson Contributing Editor Forbes Magazine has come out with its list of "Best Countries for Business" - and Denmark ranks as the world’s most business-friendly market. But unless an investor is looking to set up shop in one of these countries, you wouldn’t expect this list to be all that valuable. After all, it’s one thing to know that when a company operates in a business-friendly market, its employees and corporate officers will be well treated, and the company itself will be afforded respect. But does that necessarily allow us to predict whether or not investments in that country will appreciate in value? The truth may actually surprise you. Okay, it’s mean to leave you in suspense until the end. You can find out whether a good business climate is correlated with economic growth by comparing the country’s ranking ...

I’ve pointed out many times here in my Money and Markets column that interest rates and economic growth are always the two primary fundamental drivers of currency prices. Therefore, it’s no stretch to conclude that housing has been the Achilles’ heel for the U.S. dollar.

But what if there’s another major currency country that has a much worse outlook for its housing market? Would we then expect bad housing news to play a similar role in pushing its respective currency lower? I think the short answer is: Yes!

It’s fitting on this Independence Day holiday weekend that we examine the incredible exposure to housing prices in our motherland — the UK — compared to the U.S. …

The UK housing sector, already best by plunging demand and prices, has been hit with a potential body blow which could tip the economy into a deep recession. Taylor Wimpey, the country’s biggest home owner, has shocked the UK market and observers with the news that it has failed to agree a deal with potential new investors, forcing the stricken house builder to admit on Wednesday that it could breach banking covenants if the housing market does not recover. Coming with the news of poor sales figures for big retailer, Marks & Spencer, the Taylor Wimpey news will undermine investor confidence across the board. The company had been looking for around 500 million pounds ($A1 billion) in new capital from existing big and new shareholders, and had promised to write down the value of its land bank in Britain, Spain and other countries by around 660 million pounds (around $A1.4 billion). The write-down ...

In a lot of ways silver has been in recent decades the forgotten metal, struggling with an identity crisis as a poor man’s precious metal and/or a rather expensive industrial metal. In its glory days, Broken Hill in western New South Wales was known as Silver City, and to this day the highway leading into the town is so named. Broken Hill gave its name to a rather famous Proprietary, but these day’s when one thinks of BHP Billiton one doesn’t immediately think of silver, or for that matter the zinc and lead upon which the company built its foundations. Today junior mining companies are left to squabble over what commercial deposits may still remain at Broken Hill. Indeed for many years silver became merely a helpful by-product of mining for base metals occurring, as it often does, in base metal deposits. Base metal miners could sell the silver just ...

By Jason Simpkins Associate Editor Barclays PLC (ADR: BCS), the United Kingdom’s fourth-largest bank, may get a $927 million cash infusion from Japan’s Sumitomo Mitsui Financial Group Inc. by the end of the month. The investment, which will be made through the group’s Sumitomo Mitsui Banking Corp. unit, underscores an evolving trend among large Japanese banks that have so far been unaffected by the subprime collapse. Sumitomo Mitsui, Japan’s second largest bank, has not confirmed the agreement, but its 100 billion yen investment will secure an approximate 2.3% stake in Barclays. Barclays was racked by the housing collapse that started last year and has since dragged the U.S. economy to near recession. Barclays’ stock dropped 40% so far this year, as the bank took $3.35 billion in write-downs. Last week, Barclays said it would seek out $7.8 billion in fresh capital ...

Barclays is the financial institution in the world that most scares me. Indeed it petrifies me. It is huge (currently the second biggest institution in the world and substantially larger than Citigroup). It is highly levered. And it is in all the places you don’t want to be at the moment.

Barclays may be “too big to fail” but it is also probably “too big to bail out”.

You will have to forgive me a long post but this is one of the most important stories in the world today – and I am groping a little in the dark. Wall Street is currently (correctly) obsessed by Lehman Brothers – but they should be similarly obsessed by Barclays Global Capital. Barcap is a far more interesting and important beast. Moreover the standard hypothesis these days is that Barclays will buy Lehman. See this press report for

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In 2005 I travelled to the UK to study the UK banks. I should have shorted the lot of them. But I didn’t. But for the record here are my notes – written on a slow English train – about Northern Rock – and never finished. I have edited it only to remove references to my actual sources.

I put this up not to gloat (but its nice). Rather I am going to do an expose of another UK bank shortly.

I cannot gloat too much - because whilst these notes are amazingly prescient I did not make a fortune on the stock. I predicted rain - but its making an ark that counts!

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Quote:

Northern Rock – leverage mortgages to the max

Northern Rock is a very simple bank. It has only one strategy and it makes no

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