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Calls to nationalise RBS and Lloyds as markets lose faith in bail-outs | Business | guardian.co.uk

John McFall, confidant of Gordon Brown and chairman of the Treasury select committee, called for the complete nationalisation of Lloyds and Royal Bank of Scotland tonight after shares in both banks crumbled, the pound skidded to a seven-year low against the dollar and government bonds were sold off sharply.

As markets took fright at the state of Britain's banking sector and the wider economy the day after the government's latest bail-out plan, shares in the loss-making RBS slumped to 10.3p, continuing Monday's 66% slide, while the new Lloyds Banking Group continued to fall rapidly as it looked likely that many UK banks would not be paying any dividends for years.


Jim Rogers, a veteran US investor, said the UK economy was "finished". He told Bloomberg: "I would urge you to sell any sterling. It's finished. I hate to say it, but I would not put any money in the UK."

Rumours were awash in febrile markets that ratings agencies could downgrade the UK's sovereign debt ratings if the government had to issue tens of billions of pounds of government bonds to finance its latest rescue for the banks. A downgrade would increase the cost of raising debt for Britain, the world's fifth largest economy. The price of insuring British debt against default also rose sharply.

by ThatBritGuy (thatbritguy (at) googlemail.com) on Wed Jan 21st, 2009 at 06:26:07 PM EST

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