Global stock markets have tumbled amid growing fears of a recession in the US [BBC / Sky News / CNN]. London's FTSE 100 index fell 5.48% to 5,578.2 by the close today. In Paris the Cac-40 fell 6.83%, and Frankfurt's Dax dropped 7.16%. US markets are closed for Martin Luther King Day so any recovery will not be seen until tomorrow at the earliest. The drop in share values has been partially blamed on the US President's failure to control the downturn in the economy there with investors taking little comfort from emergency measures proposed by President George W Bush on Friday [CNN].
Meanwhile new proposals by the UK government to keep the beleaguered Northern Rock bank in the public sector and sell the business to a new owner. Questions in parliament were dismissive of the government proposal. The Chancellor Alistair Darling has said that the government may take temporary ownership if a buyer could not be found [BBC / Sky News]. In a statement in the UK parliament, the Chancellor said he was to convert Northern Rock's £25bn Bank of England loan into bonds before selling them to investors. The bonds would be guaranteed by the government to speed up a private sale of the troubled lender. One of the potential bidders is Sir Richard Branson who told Sky News that he had put a good bid forward. He said he had not had any detailed discussions with the Prime Minister but added that he had a “winnable package”. Part of his plan would be to re-label the financial business Virgin Bank.
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