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CNNMoney.com – On a gloomy morning in early August, more than a month before Wall Street and the world’s financial system seized up, a senior aide to Iceland’s Prime Minister paid a visit to the Russian embassy in Reykjavík to make a controversial request: Bail us out.
Iceland had one of the richest economies in Europe, but it had a problem. Its three main private sector banks had become so large that their assets amounted to more than ten times the gross domestic product of the country – and there were signs that they might run into trouble.
Iceland had asked its traditional allies for help, but to its consternation, its pleas to the U.S. Federal Reserve, the Bank of England, and the European Central Bank went unheeded. Instead, the answer was always, "Ask the International Monetary Fund" – a drastic step Iceland didn’t want to take.
Telegraph.co.uk – A move by US and European central banks, as well as by central banks in China, Taiwan, Hong Kong, Australia and South Korea, to slash borrowing costs has failed to reassure investors.
"It’s impossible to predict the bottom, and technical analysis is meaningless as panic and fear overwhelm the markets," said Jang Huh, at Prudential Asset Management in Seoul.
Japan’s Nikkei stock index fell 10pc, the biggest loss since “Black Monday” in October 1987 and it third biggest loss ever. The index, which closed down 881.06 points at 8,276.43, has lost more than 24pc over the past week.
Prime Minister Taro Aso warned that the slump could have real effects on Asia’s largest economy. The share price fall “has reached a point where it affects the real economy and fund raising,” he told reporters.
All indications are that European markets will open sharply lower.
The City’s regulator has threatened to impose unlimited fines on investors that breach its new rules on betting against UK bank shares amid a flurry of late disclosures by hedge funds.
The warning came yesterday as Gordon Brown promised new permanent rules to curb short-selling once the Financial Services Authority (FSA) ban expires in January. The Prime Minister said: “We’ll be reviewing over the next four months and I think you will find new rules for the future.”
Such a move could further threaten the hedge funds industry, which has grown explosively in London. The FSA last week introduced measures to tackle short selling of UK bank shares, fearing falling prices would undermine the financial system.
It ruled that any short position greater than 0.25 per cent of a market value of any 34 named financial stocks must be disclosed by 3.30pm on Tuesday this week. A number of other companies have since approached the regulator asking to be included on the list.
Independant – Gordon Brown will hail a new £1.5 billion drive to eradicate deaths from malaria in the developing world by 2015 at an emergency United Nations summit on world poverty and disease.
The initiative, to develop a vaccine and distribute bed nets and sprays over the coming years, is expected to save the lives of one million people who die from malaria every year.
It will be announced by the Prime Minister and Microsoft boss Bill Gates in New York, where 90 world leaders are gathering at the UN to discuss getting progress on the Millennium Development Goals back on track.
Mr Brown is also meeting Wall Street hedge fund chiefs to discuss the global financial turmoil which has sent shockwaves through the markets over the last week.
BBC UK News – "They hunt as a pack and can bring down financial systems" says the Daily Mirror, describing the hedge fund managers widely blamed for bringing down HBOS.
The decision to halt short selling of bank shares – for which hedge funds are widely blamed – earns the prime minister praise from the Independent, which says, "It is almost as if Mr Brown were Chancellor again".
But the Sun likens the ban to ringing alarm bells as the Titanic sinks.
‘Secret deal’
The Financial Times reports that news of Lloyds TSB’s takeover of HBOS left a "mood of melancholic resignation" in Scotland, where HBOS employs 17,000 people.
But the Daily Express says some MPs suspect a "secret deal" may have been done to protect Scottish jobs at the expense of employees in England.
Ahead of the Glenrothes by-election the government does not want to "alienate" Scottish voters, says the Times.
Bloomberg – Prime Minister Vladimir Putin said he’s “never heard of” Bill Browder, founder of the hedge-fund firm Hermitage Capital Management Inc. who has been barred from Russia since November 2005.
“I never heard of that name before,” Putin said in an interview with French newspaper Le Monde transmitted live to journalists in Paris yesterday. “If this person thinks his rights have been violated, let him go to court.”
Browder, 44, a U.S.-born British citizen, is banned from returning to Russia under a law that keeps out people denoted as threatening “the security of the state, public order or public health.” Hermitage, once the largest foreign owner of Russian stocks, said in April it’s a victim of corporate identity theft in Russia.
Putin, who stepped aside as president to become prime minister earlier this month, was queried about Browder’s exclusion at a press conference in St. Petersburg in July 2006. Putin said then he didn’t know who the reporter was talking about and could only presume he must have broken the law.
