Wednesday, September 17, 2008

AIG bailed out, but crisis continues

The US government has stepped in to save the insurance giant AIG, propping it up to the tune of $85 billion [CNN]. However the rescue effort has done little to affect confidence in the financial markets. The price of AIG stocks continue to fall adding to an already troublesome month for the company. In the last two weeks alone the value of AIG stocks has dropped over 83%. The Dow Jones also fell sharply on Wednesday following a slight recovery on Tuesday. On Monday it dropped by some 500 points and today it dropped a further 250 points in the first half of the day. In other world markets uncertainty remains. In Russia trading was halted after stocks plunged. Russia's Micex Stock Exchange and RTS Exchange halted trading for a second day as the Finance Ministry rushed to provide loans to the country's banking system and a Moscow brokerage sought to sell a stake to meet its financial commitments. Some stocks fell below levels not seen for nearly three years [BBC / Bloomberg].

In the UK the Halifax Bank of Scotland confirmed it was in talks with Lloyds TSB. And the British government has said it may overrule any concerns the completion authorities may raise [BBC].

The international financial crisis will also affect the average citizen as banks and building societies become more reticent to lending money. Mortgages will be more difficult to secure and loans too will also become harder to obtain.
[Market Data]

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