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Frightened investors 'pile into property' | Hospice is latest victim of banking crisis | Iceland denounces UK's 'unfriendly' action
Gordon Brown today calls on nations across the world to follow Britain in its “ground-breaking” moves to save the banking system.
The Prime Minister, writing in The Times, urges other governments to put money into struggling banks and offer similar guarantees worth hundreds of billions to persuade the banks to start lending to each other again.
Amid indications that the United States is considering such moves, Mr Brown calls for a global solution to a global problem. He says that he never expected to find himself taking a government stake in banks but that countries had to abandon “outworn dogmas” and embrace new solutions.
Wall Street suffered a day of dramatic losses amid continued fears of recession. The Dow Jones fell below 9,000 for the first time in five years, down 7 per cent at 8,579. Shares in London were also down, with the FTSE 100 dropping 53 points to 4,314, a new four-year low. However, HBOS shares leapt 31 per cent as traders became more confident about the impact of the Government’s £500 billion bailout package.
Mr Brown called for governments to adopt cross-border rules on transparency and the highest standards of conduct to guard against irresponsible risk-taking. A new system of supervision should also be introduced to cope with the huge flows of capital between financial institutions.
The Prime Minister said he shared the public’s anger at the damage the banks had inflicted on the economy. “I am angry at irresponsible behaviour,” he said. “Where there is excessive and irresponsible risk-taking, that has got to be punished.” Banks that signed up to the rescue plan would have to accept there could be no more huge bonus payouts. “The days of big bonuses are over. One of the conditions of us helping the banks is that we will have to reach an agreement about executive remuneration,” he said.
Mr Brown’s promises were undermined, however, when it emerged that the Financial Services Authority had no immediate plans to crack down on bonuses or to issue a code of conduct for banks. The Centre for Economics and Business Research predicts that City workers are likely to receive £3.5 billion in bonuses this year, compared with last year’s £8.5 billion.
David Cameron, the Conservative leader, said that if a bank was going to take taxpayers’ money it would be wrong for its senior executives to get a bonus this year. Nick Clegg, the Liberal Democrat leader, said that the Government should go farther and remove those executives who had caused the problems.
Tony McNulty, the Employment Minister, yesterday became the first minister to admit that Britain was heading for a recession. Ministers said contingency plans were being drawn up to cope with large-scale unemployment, including more “rapid response” teams to be sent to the worst hit areas.
The International Monetary Fund said that it was ready to help countries hit by the global credit crunch and had activated an emergency financing mechanism first used in the 1990s Asian crisis.
US Treasury officials indicated yesterday that the Bush Administration was considering taking stakes in many American banks.
In Europe, governments appeared cautious about Mr Brown’s call for “a concerted approach” to get credit flowing. EU treasuries have been impressed with the British plan as a response to the British predicament. They are uncertain, however, about making a general commitment rather than acting case by case. A guarantee was agreed yesterday by Belgium, France and Luxembourg to underwrite all borrowing by the cross-border Dexia bank for the next year. But Christine Lagarde, the French Finance Minister, who announced the plan, said that such a scheme was not required for all French banks.
Italy passed a decree supporting its banks through a part-nationalisation, although no explicit amount of funding was mentioned. It said that the move did not amount to a rescue fund and banks would be offered the money case by case.
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I am angry at irresponsible behaviour, he (Gordon Brown) said. Where there is excessive and irresponsible risk-taking, that has got to be punished. Who then is to punish Gordon Brown for selling UK gold reserves, for raiding OUR pension funds and imposing taxes wihout tangible benefits?
Anne, Oxford, UK
Who chose the rescuer for Rover? and where are the jobs now?
Let's hear from the voters.
Move the maximum time between elections from 5 years to 4 years. Feedback time.
Hugo van Randwyck, London, UK
What - the world should call itself Mr. Bean?
Ray, Glos, UK
Loads of structured input by David Cameron. David who???
Bob Yexley, Ferndown, England
As a customer service assistant in a bank I have never taken big risks, always looked after my customers & only received a pitiful bonus and/or payrise during my time in banking. Added to that I'm being made redundant - don't penalise me but instead our many Chiefs. And fine Banks who won't lend!
Billie, Liverpool, UK
I have always thought all monetary authorities have established code of conduct, ethics and carry out good banking practices. What had gone wrong? What happened to the experts? No early warning signs? Yes we have a financial earth quake - more damaging than d 2004 Tsunami and the Sichuan earthquake.
Lim, Johor Bahru, Malaysia
Oh yes, Mr. Brown
The world followed your example in encouraging housing bubbles- USA, Spain- the UK was the first and will be the last and longest to suffer. The whole world economy has to pay
What about savers
philip, moscow, rf
If lending taxpayers cash to banks for them to re-lend back to tax payers with interest is a 'good example'... I must be a cabbage!
Mike, Cotswolds, UK
The dozy man created the problem and now wants to blame everyone else and take the credit. I hope that everyone will remember the past 11 years, the gold sell off, hundreds of stealth taxes, raiding pension funds, wasted government spending and the social cost of his policies. Remember till you vote
roger, London, England
It seems to me rather ironic that the banks are flopping but they are being 'saved' by money.
Are we not just trying to bail out a massively sinking ship with small drinking vessels?
Lets give the failing banks all our money, to lose again.
I love capatilism.
Charlie, High Wycombe, UK
Gordon Brown is doing a good job considering the circumstances. For all his faults, consider this: Imagine if David Cameron was already PM. Does anyone actually think he would have a clue what to do in these times?
Mark Johnson, Birmingham, UK
Already Brown is hooting his own horn, when he doesnt even know if what he has planned will work. To sort out the current downturn won't be a short term measure but a long term plan.
L, London, UK
Churchills statement. "Never have so many owed so much to so few" Oue economy is in melt dowm our international reputation destroyed because of inept politicians who were asleep at the switch & so taken with their own importance they said they were Yahweh/ god - done away with Boom & Bust.
Jas, Alders, UK
rich
This is the man who plundered the pension funds, squandered the proceeds and then says if we should all take out private pensions; who introduced a 10p tax rate that most affects the lowest paid.
I'd rather have a man with judgement who can make sound decisions - today rather than next week.
Bernard, Edinburgh, Scotland
'I am angry at irresponsible behaviour..."
No doubt this anger is not to include certain politicians who followed tax and spend and are now 'into' borrow and spend? Nor will it include the person in charge of UK finances and regulatory system during the Age of Irresponsibility?
m collins, Leeds,
It is good to see Brown has taken this action. Although painful in the short-term, it will surely help in the long-term. With an election approaching in the US though I fear any short-term pain will be deemed to painful there.
Tim Miles, London, UK
whats wrong? all the goverments in the world are giving our money for privete banks right now.Tax payers has to repay these money for goverment in a period of few years in additional taxex. why i have to work for it? i did not risked my money on stock so why have I to pay for banks or stupid gov`s?
Robert, hull, UK
Is Gordon Brown really trying to score points in a time like this?
Follow his example? What about everything he did that preceded the crash? Does he want the world to copy that? This crisis is making this man take leave of his senses.
They also call it cognitive dissonance.
Paul Davis, London,
Ok I believe him, but watch out when Far East, Asian and Russian banks start bailing out western banks then there will be a shift in world order by which time of course there would have been a general election and Mr.& Mrs Brown would have retired to cloud cuckoo land leaving the rest of us in poo!
Dave Farmer, Broxbourne, England
Wait till 'credit default swaps' come into play Mr. Brown. What are you going to do then????
Louis , Liverpool, UK
I feel sorry for UK and the children who have to pay for this Brown policy, He should follow US and iCELAND and let the banks go belly up. In the future there will only be one state owned bank in each country and this money from Brown are lost money.
Tumi, Reykjavik, Iceland
This will be the making or breaking of Brown.
Garth, Newport, UK
Seems like not so long ago Brown was being bashed for putting taxpayers money to bail out banks, now it's the fat cats bonuses. The tories must be secretely thanking their stars that they got Gordon on the job..imagine the alternative now...
Michael Djan, Lagos,
de Tocqueville said:
in a democracy the people get the government they deserve;
The Texans (supposedly) say:
If all you ever do
Is all you ever did
Then all you ever get
Is all you ever got.
The Blues' Brothers said - that means you, you ,you!
Realise people everyone is to blame.
virgil hilts, parigi,
We are the ones that borrowed therefore we should only blame ourselves Those that saved good on you most your money will be safe
Its clear a bigger game is being played in the stockmarket & somebody is making a lot of money out of the fluctations Until they stop we wont get stability
ben, manchester, UK
So much for the FSA being an objective body. It is run by bankers for bankers. If Gordon Brown really wants change he must outlaw all bonuses or tax them at 100&%. Then he should remove the secrecy over the banking world's offshore operations to bring back the untaxed billions hidden away
peterfieldman, paris, france
The World is in a mess and Gordon struts his stuff as saviour. Meantime the pound continues to sink, which if the man new anything about economics says it all in terms of real world judgment of his ability. Hubris is not the answer, an election is.
Michael Wood, London, U K
The man that encouraged huge borrowing, sold of gold and helped to cripple the country. This really shows he is out of touch.
andy, winchester,
I want to see heads roll, fat cats have had a free leash for far too long, they act irresponsibly and we have to suffer the consequences. Its time people at the top got their hands chopped off for their greed.
Sarah Jones , Huddersfield , West Yorkshire
Just a few days on and we now know what Brown did hasn't worked, it was a mistake. He might as well have bet the whole lot on a hand of poker for all teh good it has done.
Sue Doughty, Twyford, UK
It is obvious that if in the current climate the FSA are condoning the issue of 3.5 billion in bonuses to the people that caused the economic situation that the first stabilisation action to be taken should be an investigation into and rationalisation of (i.e. redundancies in) the FSA
Eric Pritchard, Clevedon, UK
Why do people say things like "Brown has runied everything"??
People werent complaining 5 years ago when things were good!!
People should open their eyes and stop whinging. Give the guy a break and lets see how things pan out over the next few months before giving him such a hard time!!!
Danny, Ennis, ireland
I couldn't believe this headline. I think I have heard it all now ! Gordon Brown, probably the worst Chancelor and PM this country has ever had; the man who has systematically, over the last 11 years, ruined Britain, has the audacity to think the World should his example. He's mad. Get rid if him.
Dennis Ashmore, Ripley, UK
I think people like Brown urgently need to be takenn down a peg or two. To hail himself as any kind of examle to the world is just ludicrous. Together with the equally reckless US, he provided the ground for all this mess to happen. He is a cynical, useless talking head without any kind of decency.
Delphine, Oxford,
Like lemmings. It is easy to use other peoples money. We are in this mess due to 10 years of Brown spending beyond the Countrys needs and selling all the Countrys fixed assets. The is no plan B when this one blows.
Simon Sewing, Sterling, Scotland
Such astonishing arrogance from a man who claims the tories are the party of arrogance!
I am looking forward to the day the UK can say goodbye to this idiot, unfortunately he will hang on as long as he possibly can despite the overwhelming voice of the people saying "go now"!
bill, Knaresborough,
and why hasn't the world followed? I wonder...
cww, Ipswich,
Brown has been responable for the UK economy for years, and many of the causes of this crisis were permitted and even encouraged by him. Now he has a rescue package that pulls him up in the poularity polls. Sounds like food for conspiracy theorists to me !
Paddy, Grasse, France
It would seem Brown fancies himself a bit of Churchill of the economic downturn. If he can pull it off I may just forgive him for being such a huge waste of space up until now.
R Wilson, Salisbury, UK
Fat cat bankers? Fred £4m heading a 1.6 trillion bank. Head of local council about £200k for a tiny organisation by comparison - look at the %ages. And I'm no fan of Fred's
Follow Gordo? Deeper into the hole. Massive gamble with borrowed money, that this morning isn't working.
Higher tax soon
ws, Manchester,
I feel cheated, I did not risk my money on stocks and instead put my money into the banks as this was risk free but with little interest. The banking industry has taken terrible risks which have failed and now I find that my money is also at risk and I may only get back some of this. Shame on FSA.
joe, edinburgh, scotland
banking salaries should be benchmarked against senior treasury officials. bonuses should be allowed but only on the basis of proven long term performance - say over a 5 year period. at the moment, the bonus system rewards one night stands rather than encouraging long term relationships.
ste, china, china
Brown's opinion of himself is so high that he appears to consider himself one step short of godhood. The rest of the country has a different opinion.
The saving grace for the country is that after hubris comes nemesis.
Cynosarges, London, UK
Mr Brown did tow a very dicisive stance in billing out the banks. I sincerely want to see him repeat such posture against the irresponsible fat bounces these players pay themselves for not doing the right thing.
Obidike Onyedibe, London, England
i just started thinking the PM is actually a good guy....i think he has suffered from the domination of BLAIR who clearly supported the politics of greed . BROWN's true colurs are starting to show and they are those of the ordinary hard working man! He may not aways be right but he has morals!
rich, PORTSMOUTH, ENGLAND
Ahh...What? No offense to you Brits but your leader is saying follow me. Look man, I follow the guy that can pull the US and the world out of the hole.
James McCullough, Queens, New York, United States of America
Sub prime existed massively in the UK as well, its stupid to keep blaming the USA as the only culprit. Our housing market and credit card lending have been running out of control for years, it was the only thing keeping our economy growing so the Government didnt dare stop it.
am, letchworth,
This is actually incredible, the worst ever thing and i mean the worst is that Gordon Brown actually believes as did Bliar that they are doing and have been doing good things, leadership is about a long term plan that might need short term pain not visa versa.
Peter, Aldershot, UK
Sophie Smith
You shouldn't be surprised that he thinks he's a hero. After all he believed he ended Boom and Bust.
John Goode, Welwyn Garden City, UK
The world must follow his example ? ? ?
Honestly, that Brown - he's a right comedian isn't he ?
But with THAT delusion of grandeur, I think he has finally lost his marbles, on top of losing most of our money.
Trevor, Ipswich, UK
Gunther has hit the nail on the head!
hear hear!
Sophie, Sydney,
The banks did follow his example by parking their debts off the balance sheet i.e PFI!!!! Look where that got us!
Ian, Tokyo, Japan
Hes havin a laugh, are you havin a laugh??
Jon, Melbourne, Asutralia
This man has wrecked the UK economy along with a many other things back home. Now he has the tenacity to claim he is the hero for the rest of the world. Every time he opens his mouth its like he has stumbled across the scene of a nasty accident, never his doing. No fit for purpose, a big con artist.
Mark Mortimer, Hangzhou, China
"We're off to see the Wizard, the wonderful Wizard of Oz..." Why must all politicians, worldwide, all inclusive, be such pompous butt heads? None are exempt. The media labels them, facetiously, Global leaders. How do they do that with a straight face?
SGA, Tampa, USA
and nationalising the british railways left us with the best rail natwork in the world didnt it.
in 10 years or whenever banking stock has recovered, london will just be some average regional financial centre. dubai, shanghai and a european centre will over take us, if we kill london with rules
will, grimsby, uk
Discredited and Disgraced
Gormless the Traitor who signed us all into his EU Prison Camp.
Where is all the "Unity".
He was Chancellor and allowed the unrestrained and unregulated greed of his Banker Backers.
Nu Labour.
Bah!
rick, newcastle, uK
Stop blaming the bankers and congratulating yourself. You gave the MPC a 2% inflation target 10 years ago. The result has been that interest rates have been far too low for 12 years. Now we have a massive debt bubble that has just popped. You are as guilty as Greenspan with his US bubble. Resign.
GH, New York, USA
Is it OK to say that this system was first tried in
Sweden 1991 and the taxpayers ended up with
a profit?
Gunther, Santa Ponsa, Spain
Gordon, do not count your chicken before they are hatched any more . For eleven years you have been boasting about your wonderful stewardship of the economy. Now we learn that the Government and the regulators were asleep on duty while our financial institutions and nest eggs rotted to the core.
S Yogarajah, Harrow, UK
Brown actually thinks he is a hero! Unbelievable! Having watched debt levels rising over the past 11 years coupled with ever rising house prices, he is now pumping money into banks like its going out of fashion yet still sees himself as the worlds saviour and himself as blameless! Incredible!
sophie smith, london, uk