Bank of England releases £5 billion of liquidity
rwendland Mon Mar 17, 2008 at 12:15:29 PM GMT 
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Just heard on the BBC radio 4 11am news that the "Bank of England has injected £5 billion into the financial markets in a bid to restore stability ... dealers fear that the banking crisis in the USA will spread around the world". Looks like a whole new economic world might be starting today!
Dollar plunges as Fed grapples with meltdown threat
Foreign investors veto Fed rescue
Shares tumble as Fed battles implosion
Financial turmoil: experts' reaction
Update1: Well the Telegraph certainly overcooked it with meltdown threat headlines, but the banks did overbid five-fold for the £5 billion. British banks bids were for £23.6 billion of the three day 5.25% Bank of England loan. Not sure if they really needed it, or just wanted cheaper money than the market was offering.
The US Fed used powers not used since 1932, "to shower money on almost anybody it wishes by a vote of five governors in 'unusual and exigent circumstances'."
Interesting comment that the Euorpean central banks don't see things the same way as the Fed:
chief Europe economist at Standard & Poor's, said the Europeans were in no mood to rescue America. "There is monetary war going on. The ECB view is that Fed is a victim of its own mistakes and should pay for its past crimes. Frankly, they don't see why they should be cutting rates when inflation (3.3pc) is accelerating," he said.
Update2, Tuesday: Murdoch favourite Irwin Stelzer, of all people, seems to have one of the better analysis. From a Labour/Tory angle I liked this:
While we wait, Americans have stopped sneering at Britain for nationalising Northern Rock. After all, the Fed needs White House and Treasury approval for taking $30 billion of Bear Stearns’s liabilities on to its own balance sheet because in the end taxpayers are now on the hook. If it looks like nationalisation, and feels like nationalisation, it is nationalisation. And there is more to come.
I wonder how the Tories will play the fact that their model U.S. economy, that they wish we would emulate, is sliding down the pan? Unfortunately the rest of the world seems to have already linked the UK & US economies, by the way the Pound is declining much as the Dollar is; the Pound had its biggest one-day fall (2%) since 1992 yesterday.
