Okay, I hate to say I told you so, but there’s little joy in being right about the final US treasury approval of the $700 billion dollar bailout plan… doing virtually nothing. The rescue plan has done very little to calm jittery financial markets everywhere. I really didn’t think it would halt the downward slide when it was proposed and that certainly seems to be the case. Incredible way to blow nearly a trillion dollars of tax payer cash though – wow!
Yesterday in response, unconvinced financial minds, brokers and investors forced the FTSE to a gloomy new record – Monday 6th October 2008 saw the lowest drop in the FTSE value in one day that it has ever experienced.
The Asians are not convinced the cash injection has done the trick either – yesterday the Nikkei dropped to it’s lowest level since 2004. The Yen is rising whilst the Euro and GBP head in the opposite direction. Government Gilts are being snapped up as folks scramble for security.
Covered bonds are in sharp focus too. These are mortgages/loans to the public sector – which are ‘secure’ or ‘covered’ by a pool of assets. They are subject to stiffer regulation and those issuing the bonds must make sure their assets reserves consistently cover/back their covered bonds. Institutions which have access to them are set to fare better in weathering the worsening credit/mortgage crisis here in UK.
