Time line of the Credit Crunch and how we ignored the crisis

Global Strategic Enterprises, Inc for Peace and Prosperity-

www.globalbelai4u.blogspot.com


Re: Timeline of the Credit Cruch and Global Financial Crisis.

This is a very important time line for all of us to consider seriously regardless of our social standing and professional background. We all were let down by those we trusted to be honorable, professional, competent and most importantly transparent and accountable.

No one wanted to be accountable. All failed, especially those in Wall Street and Main Street. Imagine a white house that declared Government was the problem and should not be in the way of business and called for de-regulation for so long. Those mantras of Days of Good and Big Government are gone and in is small and corrupt government that is not accountable. Those days are gone for ever!



The time line below shows clearly how we got here. It did not happen overnight. There were lots of signs and events to alert us about the catastrophy.

Those in authroity and responsiblity to take action just slept in the Greed Wagon.

How we got here? is a very interesting lesson for future generations, both comedians and historians as well as those who want to govern the future.

A time line of the Credit Crunch or Market Crisis shows what fools were running the Free Market or No one was running things. Deregulation, open free market became the mantra that allowed our CEOs on their criminal goals of robbing the banks and the speculators were literally playing fool on all of us.

Imagine some thing called shadow banking or hedge funds as they call them where billions were being made without any regulation or accountability. Shadow banking is not transparent, not available to all, but to few insiders who robbed every body. Imagine, a bailout for the worst criminals and robbers of our time. I remember, Ronald Regan's supporters calling Lani Guiner the Welfare Queen, now we have the Corporate Welfare Emperors being rewarded by the last out going Republican Administraton that sang deregulation for so long.



There were lear warning signs and there was no one at the driving seat! The world events before the crisis and during the crisis clearly show those responsible to monitor the market slept at the driving seat and how the speculators got us in to this mess. Can we do some thing about it? That will be the role of Barack Obama's team here in the US and the same old chronies in Europe and Asia. We need change we can believe in.

Lesson from the Global Credit Crunch Time line is here for us to be more vigilant in the futue and pay attention to details and clear warning signs, all the time.

Dr B



Timeline: Global credit crunch

A year ago, few people had heard of the term credit crunch, but the phrase has now entered dictionaries.

Defined as "a severe shortage of money or credit", the start of the phenomenon has been pinpointed as 9 August 2007 when bad news from French bank BNP Paribas triggered sharp rise in the cost of credit, and made the financial world realise how serious the situation was.

The problems, however, started much earlier. GROWING SUB-PRIME PROBLEMS

After a two year period between 2004 and 2006 when US interest rates rose from 1% to 5.35%, the US housing market begins to suffer, with prices falling and a rise in homeowners defaulting on their mortgages.

Default rates on sub-prime loans - high risk loans to clients with poor or no credit histories - rise to record levels.

APRIL-AUGUST 2007: SUB-PRIME CONTAGION

April


The credit losses associated with sub-prime have come to light and they are fairly significant...Some estimates are in the order of between $50bn and $100bn of losses
Ben Bernanke, Chairman US Federal Reserve, speaking on 20 July 2007

New Century Financial, which specialises in sub-prime mortgages,

As it sold on many of its debts to other banks, the collapse in the sub-prime market begins to have an impact at banks around the world.

July

Investment bank Bear Stearns tells investors they will get little, if any, of the money invested in two of its hedge funds after rival banks refuse to help it bail them out.

Federal Reserve chairman Ben Bernanke follows the news with

AUGUST 2007: SCALE OF THE CREDIT CRISIS EMERGES

9 August 2007


BNP's statement is scary, to put it mildly
BBC Business Editor, Robert Peston


Investment bank BNP Paribas tells investors they will not be able to take money out of two of its funds because it cannot value the assets in them, owing to a "complete evaporation of liquidity" in the market.

It is the clearest sign yet that banks are refusing to do business with each other.

The European Central Bank

. It adds a further 108.7bn euros over the next few days.
The US Federal Reserve, the Bank of Canada and the Bank of Japan also begin to intervene.

17 August


by half of a percentage point to 5.75%, warning the credit crunch could be a risk to economic growth.
21 August

UK sub-prime lenders begin to withdraw mortgages or put up the cost of borrowing for UK homeowners with poor credit histories.

28 August

German regional bank Sachsen Landesbank faces collapse after investing in the sub-prime market;

SEPTEMBER 2007: A RUN ON A BANK

3 September

German corporate lender IKB

4 September

The rate at which banks lend to each other rises to its highest level since December 1998.

The so-called banks either worry whether other banks will survive, or urgently need the money themselves.

13 September


The fact that it has had to go cap in hand to the Bank is the most tangible sign that the crisis in financial markets is spilling over into businesses that touch most of our lives
Robert Peston, BBC business editor


The BBC reveals Northern Rock has asked for and in the latter's role as lender of last resort. Northern Rock relied heavily on the markets, rather than savers' deposits, to fund its mortgage lending. The onset of the credit crunch has dried up its funding.

A day later depositors withdraw £1bn in what is

They continue to take out their money until the government steps in to guarantee their savings.
18 September

The US Federal Reserve

19 September

After previously refusing to inject any funding into the markets,

OCTOBER 2007: MAJOR LOSSES BEGIN TO EMERGE

1 October

Swiss bank UBS is the world's first top-flight bank to request The chairman and chief executive of the bank step down. Later, banking giant Citigroup unveils a sub-prime related loss of $3.1bn. A fortnight on Citigroup is forced to write down a further $5.9bn. Within six months, its stated losses amount to $40bn.

30 October

Merrill Lynch's chief

NOVEMBER 2007: UK HOUSING MARKET 'TURNS DOWN'

29 November

The Bank of England

30 November

The Council for Mortgage Lenders (CML)

saying that without more funding available on financial markets, mortgage lenders will not be able to offer as many mortgages.
DECEMBER 2007: HELP IS AT HAND

6 December

US President George W Bush

The Bank of England cuts interest rates by a quarter of one percentage point to 5.5%.

13 December

The US Federal Reserve

The Bank of England calls it an attempt to "forestall any prospective sharp tightening of credit conditions". The move succeeds in temporarily lowering the rate at which banks lend to each other.

17 December

The central banks continue to make more funding available.


and, the following day, $500bn from the European Central Bank to help commercial banks over the Christmas period.

NEXT UP: THE BOND INSURERS

19 December

Ratings agency Standard and Poor's downgrades its investment rating of a number of so-called monoline insurers, which specialise in insuring bonds. They guarantee to repay the loans if the issuer goes bust.

There is concern that insurers will not be able to pay out, forcing banks to announce another big round of losses.

9 January 2008

The World Bank

as the credit crunch hits the richest nations.
18 January

A rush to withdraw money from its commercial property funds

for investors wanting to take their money out.
It blames the rush of withdrawals on concerns about the US sub-prime mortgage collapse, recession worries and interest rates.

21 January

Global stock markets, including London's FTSE 100 index,

22 January

The US Fed

- its biggest cut in 25 years - to try and prevent the economy from slumping into recession.

It is the first emergency cut in rates since 2001. Stock markets around the world recover the previous day's heavy losses.

31 January

A major bond insurer MBIA,

-blaming its exposure to the US sub-prime mortgage crisis.
FEBRUARY - MARCH 2008: BIG NAME CASUALTIES

7 February

US Federal Reserve boss

saying he is closely monitoring developments "given the adverse effects that problems of financial guarantors can have on financial markets and the economy".
The Bank of England cuts interest rates by a quarter of one percent to 5.25%.

8 February


Some investors forgot the golden rule of financing: 'Don't buy things that you don't understand'
FSA chief executive Hector Sants, speaking on 27 February

In the UK, the latest

its highest level since 1999.
10 February

Leaders from the G7 group of industrialised nations say worldwide losses stemming from the collapse of the US sub-prime mortgage market could reach $400bn.

17 February

After considering a number of private sector rescue proposals, including from Richard Branson's Virgin Group,

7 March

In its biggest intervention yet,

to try to improve liquidity in the markets.
17 March

Wall Street's fifth-largest bank,

in a deal backed by $30bn of central bank loans.
A year earlier, Bear Stearns had been worth £18bn.

28 March

Nationwide

revising its previous forecast of no change in prices.
APRIL 2008: THE 100% MORTGAGE IS CONSIGNED TO HISTORY

2 April

Moneyfacts, which monitors financial products,

in the previous seven days.

I have a deep sense of shock at how deeply our successful industry has already been hit by these unprecedented funding market conditions
Steven Crawshaw, chairman of the Council for Mortgage Lenders, speaking on 11 April 2008

Five days later the 100% mortgage disappears when

8 April

The International Monetary Fund (IMF), which oversees the global economy,

It says the effects are spreading from sub-prime mortgage assets to other sectors, such as commercial property, consumer credit, and company debt.

10 April

The Bank of England cuts interest rates by a quarter of one percent to 5%.

11 April

A warning is issued by the CML that the amount of funding available for mortgages in the UK could be cut in half this year.



The effects of the credit crunch are likely to be broader, deeper and more protracted than previously expected
IMF global stability report, 8 April 2008

15 April

Confidence in the UK housing market

according to the Royal Institution of Chartered Surveyors, because of the "unique liquidity blight".
But it does add that the situation is good news for buyers with large deposits who can buy property that was previously out of reach.

21 April

The Bank of England announces details of an

by allowing them to swap potentially risky mortgage debts for secure government bonds.
APRIL - JUNE 2008: BANKS PASS ROUND THE HAT

22 April

Royal Bank of Scotland

with a £12bn rights issue - the biggest in UK corporate history.
The firm also announces a write-down of £5.9bn on the value of its investments between April and June - the largest write-off yet for a British bank.

25 April

Persimmon becomes

citing the lack of affordable mortgages and a fall in consumer confidence.
It adds sales have fallen by a quarter since the beginning of the year.


Because of the uncertainties in the global economy and the UK lending environment, it is difficult to predict when the [housing] market will improve
House builder Persimmon


29 April

The CML says

, the lowest monthly number since records began in 1999.
30 April

The first

is recorded by Nationwide.
Prices were 1% lower in April compared to a year earlier after a "steep decline" in home buying over the previous six months.

Later in the week, figures from the UK's biggest lender Halifax, show a 0.9% annual fall for April.

2 May

More than

government figures show, a rise of 54% on the previous year. Retail and construction firms are hardest hit.
22 May

Swiss bank UBS, one of the worst affected by the credit crunch,

to cover some of the $37bn it lost on assets linked to US mortgage debt.
19 June

There are significant developments in two major credit crunch-related investigations in the US, which it is hoped will restore confidence in the credit markets.

The FBI

as part of a crackdown on alleged mortgage frauds worth $1bn.
Separately,

linked to sub-prime mortgages.
It is alleged they knew of the funds' problems but did not disclose them to investors, who lost a total of $1.4bn.

25 June

Barclays

to bolster its balance sheet.
The Qatar Investment Authority, the state-owned investment arm of the Gulf state, will invest £1.7bn in the British bank, giving it a 7.7% share in the business. A number of other foreign investors increase their existing holdings.

JULY 2008: MAJOR LENDERS ON THE EDGE

8 July

The gloomy findings of a survey of its members

within months.
Meanwhile, the FTSE 100 stock index briefly dips into a "bear market", in which the market suffers a 20% fall from its recent highs.


The outlook is grim and we believe that the correction period is likely to be longer and nastier than expected
British Chambers of Commerce, 18 July 2008


13 July


- the second-biggest bank in US history to fail.
14 July

Financial authorities

As owners or guarantors of $5 trillion worth of home loans, they are crucial to the US housing market and authorities agree they could not be allowed to fail.
The previous week, there had been a panic amongst investors that they might collapse, causing their share prices to plummet.

21 July

Just

because they are priced higher than existing shares are trading on the stock market.
But HBOS still gets the £4bn it wanted, as the unsold new shares are bought by the issue's underwriters.

31 July

UK house prices

a decline of 8.1%.
The average home now costs £169,316. That is nearly £15,000 cheaper than in the same month last year.

Meanwhile, HBOS reveals that profits for the first half of the year sank 72% to £848m, while bad debts rose 36% to £1.31bn as customers failed to repay loans.

AUGUST - SEPTEMBER 2008: GIANTS SUFFER

4 August

Global banking giant HSBC

after suffering a 28% fall in half-year profits.
Of Europe's top banks, HSBC has among the heaviest exposure to the troubled US housing and credit markets.

22 August

The bad news continues with revised figures from the ONS revealing that the UK economy is a standstill.

28 August

Nationwide reveals that UK house prices have fallen by 10.5% in a year.

A day later

blaming surging mortgage arrears for a rise in impairment.
Looking ahead, it warned it expected arrears to remain at high levels for the rest of the year.

30 August

Chancellor Alistair Darling

in an interview with the Guardian newspaper, saying the current downturn would be more "profound and long-lasting" than most had feared.
1 September

Official figures from the Bank of England show a slump in approved mortgages for July.

Meanwhile, while

and two-year lows of $1.80.
2 September

In an effort to kick-start the UK housing market

from £125,000 to £175,000.
But there is more bad news, as the Organisation for Economic Cooperation and Development forecasts that the UK will be in a full blown recession by the end of the next two quarters. A day later the European central bank cuts growth forecast 2009 to 1.2% from 1.5%.

4 September

The Bank of England leaves rates on hold at 5% while the latest figures from the Halifax show that house prices in England and Wales continue to fall.

5 September

A raft of negative news from around the world

The US labour market figures - which showed the unemployment rate rising to 6.1% - were a further jolt to investors who have had to swallow a slew of poor economic data in recent days.

6 September

The Halifax

Chief executive Andy Hornby explains that British banks will continue to suffer major problems in offering loans until they can raise significant sums on wholesale markets, something that will not be possible until US house prices recover.
7 September

Mortgage lenders Fannie Mae and Freddie Mac - which account for nearly half of the outstanding mortgages in the US -

Treasury Secretary Henry Paulson says the two firms' debt levels posed a "systemic risk" to financial stability and that, without action, the situation would get worse.

At the same time, in the UK, the Nationwide announces it will merge with two smaller rivals, the Derbyshire and Cheshire Building Societies.

9 September

More bad news emerges for the UK economy as the ONS reveals manufacturing output fell by 0.2% between June and July, raising a real fear of recession.

Meanwhile, the British Retail Consortium reports UK retail sales values fell by 1.0% on a like-for-like basis from August 2007.

On the housing front, there were more negative headlines with the Royal Institute of Chartered Surveyors

while the CML reported that the number of first-time buyers has hit its lowest level since its survey began in January 2002.
10 September

Wall Street bank Lehman Brothers posts a loss of $3.9bn for the three months to August.

The announcement comes against a background of further dire economic warnings from the European Commission, which

15 September

After days of searching frantically for a buyer,

becoming the first major bank to collapse since the start of the credit crisis.
Former Federal Reserve chief Alan Greenspan dubs failure as "probably a once in a century type of event" and warns that other major firms will also go bust.

Meanwhile fellow US bank

for $50bn, the latest twist in a dramatic turn of events on Wall Street.
16 September

The US Federal Reserve

to save it from bankruptcy. AIG gets the loan in return for an 80% public stake in the firm.
17 September

Britain's biggest mortgage lender

creating a banking giant holding close to one-third of the UK's savings and mortgage market. The deal follows a run on HBOS shares.
25 September

In the largest bank failure yet in the United States, Washington Mutual, the giant mortgage lender which had assets valued at $307bn is

The group was hit by mortgage defaults the collapse of the US housing market after its expansion into sub-prime lending.


28 September

The credit crunch hits Europe's banking sector as the European banking and

It is seen as too big a European bank to be allowed to go under.
Authorities in the Netherlands, Belgium and Luxembourg agree to pour in 11.2bn euros ($16.1bn; £8.9bn). Fortis' share price has fallen sharply amid concerns about its debts.

In the US lawmakers announce they have reached a bipartisan agreement on a rescue plan for the American financial system.

The package, to be approved by Congress, allows the Treasury to spend up to $700bn buying bad debts from ailing banks.

It will be the biggest intervention in the markets since the Great Depression of the 1930s.

29 September

In Britain the

The British government takes control of the bank's £50bn mortgages and loans, while its savings operations and branches are sold to Spain's Santander.
The Icelandic government takes control of the country's third-largest bank Glitnir after the company had faced short-term funding problems.

Wachovia, the fourth-largest US bank, is bought by its larger rival Citigroup in a rescue deal backed by the US authorities. Under the deal, Citigroup will absorb up to $42bn of Wachovia losses.

The US House of Representatives rejects a $700bn rescue plan for the US financial system - sending shockwaves around the world.

It opens up new uncertainties about how banks will deal with their exposure to toxic loans and how credit markets can begin to operate more normally. Wall Street shares plunge, with the Dow Jones index slumping 7% or 770 points, a record one-day point fall.

30 September


as the deepening credit crisis continues to shake the banking sector.
After all-night talks the Belgian, French and Luxembourg governments said they would put in 6.4bn euros ($9bn; £5bn) to keep it afloat.

Separately,

.
In the UK, Prime Minister Gordon Brown says the government is planning to raise the limit on guaranteed bank deposits from £35,000 to £50,000.

1 October


which eventually approves an amended $700bn financial rescue bill.
Market confidence that Lloyds TSB's takeover of HBOS will not be derailed by stock market volatility sees HBOS shares rise 20%.

A report says that French Finance Finister Christine Lagarde calls for an emergency EU bail-out fund for banks threatened with failure.

The EU says it is looking at whether Ireland's full guarantee of saving deposits is anti-competitive.

3 October

The US House of Representatives

The 263-171 vote was the second in a week, following its shock rejection of an earlier version on Monday.

The UK's City watchdog, the Financial Services Authority (FSA)

6 October

Germany announces a

The deal to save Hypo Real Estate, reached with private banks, is worth 15bn euros more than the first rescue attempt, which fell apart a day earlier.

World stock markets

.
The

Chancellor Angela Merkel's had earlier said that no German savers would lose any money. But it emerges that this was a was a political pledge, rather than one which would see it change laws on banking deposits.

However Denmark had already responded by giving a 100% guarantee on savings, while Sweden increased its protection levels.


The country's largest banks agree to sell off some of their foreign assets and bring them home.



Story from BBC NEWS:
http://news.bbc.co.uk/go/pr/fr/-/2/hi/business/7521250.stm

Published: 2008/10/06 10:52:53 GMT


Here is Johnny came late. The IMF wants to get involved too with Bush's folly of the century:

http://www.worldbank.org/news. For inquiries call 202-473-7660 or send a written request to the News Bureau.

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Friday, October 10, 2008
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The Financial Crisis: Global Action Needed, Says World Bank
IMF Takes Action To Stem Crisis
Africa: There Is Hope
Drug Firms Agree To Invest More In AIDS Research: UN
Six million Ethiopians need emergency aid: charity.
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The Financial Crisis: Global Action Needed, Says World Bank.
=================================================

"Leaders of the International Monetary Fund and the World Bank called for swift, coordinated action on the global financial crisis, writes The Wall Street Journal. World Bank President Robert Zoellick said...that the Group of Seven major economic powers need to take steps to combat the financial turmoil and to help poor countries deal with their problems.

'I hope the G-7 will point toward coordinated action to show that authorities are getting ahead of the curve,' Mr. Zoellick said, in advance of weekend meetings of the IMF and World Bank and Friday's meeting of G-7 finance ministers and central-bank governors." [The Wall Street Journal]

Reuters further reports Zoellick said on Thursday "the world should not forget the needs of the world's poorest countries as it focuses on the financial rescue. 'Over recent weeks, attention has focused on the size of financial package, and on the impact on Main Street,' Zoellick told a news conference ahead of a World Bank and International Monetary Fund meeting of global finance leaders in Washington this weekend.

'There are Main Streets all over the world. We must look beyond the financial rescue to the human rescue,' he added. Zoellick said the World Bank was tentatively forecasting growth in developing countries could slow to around 4 percent, significantly lower than its April forecast of 6.6 percent.

Zoellick said a fall in exports from slowing advanced economies will trigger a falloff in investments, while deteriorating financing conditions, combined with monetary tightening, will trigger business failures and possibly banking emergencies in developing nations. 'The poorest cannot be asked to pay the biggest price,' Zoellick said. 'For the poor, the costs of crisis can be life-long,' he added." [Reuters News/Factiva]

Dow Jones adds Zoellick said "Group of Seven leading industrial nations need to get 'ahead of the curve' on the financial crisis and also help poor countries deal with their problems. Poor countries already dealing with the 'double jeopardy' of rising food and fuel prices are now facing a 'triple hit' as the financial troubles continue to spread, said Zoellick, reiterating that many of them are at a 'tipping point.'" [Dow Jones/Factiva]

Meanwhile, Reuters reports that "A new World Bank report on Thursday named 28 countries in Africa, Asia and the Middle East facing financial strains due to high food and fuel costs and now from a cascading credit crisis....The report, published ahead of weekend IMF and World Bank meetings of finance and development ministers, said many of these countries had little or no room to take on new debt to afford the higher prices.

It said resource-rich developing countries had the means to cushion the current account impact of costlier food and fuel. But inflation is rising and they could be afflicted by 'Dutch disease,' a phenomenon in which high revenues from natural resources lead to a strengthening of a currency.

The World Bank said countries whose budgets were squeezed by higher prices could qualify for its assistance, which would target specific reforms to reduce unsustainable energy or food subsidies or design social programs that targets the poorest. [Reuters News/Factiva]

In a separate piece, Reuters reports the World Bank President said the global financial crisis would take a turn for the worse if countries responded by erecting barriers to trade. Countries 'need to recognize the dangers of protectionism which could exacerbate the downturn in financial markets,' Zoellick said at a news conference ahead of the fall meetings of the International Monetary Fund and World Bank.

The bleak outlook for completion of the long-running Doha round of world trade talks raises concerns that countries could turn to protectionism, he said. Zoellick said he was worried that the failure of the Doha round would put strain on the Word Trade Organization as an institution by shifting its primary role to dispute settlement. [Reuters News/Factiva]

Dow Jones writes Zoellick told French state-owned France 24 that "countries should focus on addressing bad assets held by financial companies and actively inject liquidity into the banking system as needed, the head of the World Bank said in a radio interview Friday. He said the crisis has deepened as a result of a lack of information that has spawned a lack of confidence. Zoellick said governments should continue to recapitalize troubled financial companies and address the needed regulatory reform for the future." [Dow Jones/Factiva]

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IMF Takes Action To Stem Crisis.
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"The International Monetary Fund (IMF) has activated an emergency finance mechanism to help countries hit by the financial crisis. IMF chief Dominique Strauss-Kahn said the lending procedure would allow the IMF to react quickly to support countries facing funding problems.

Strauss-Kahn said the events of the past few weeks were beginning to take their toll on emerging economies as credit lines were cut and as trade was being hit by slowing demand in Western economies.

He said the IMF was ready to assist any country in need of funding through its emergency aid mechanism, set up in 1995 to help Mexico stabilize its financial system after a crisis of confidence that led to sharp declines in the country's currency.

The Philippines, Thailand, Korea and Indonesia also drew on the mechanism to access billions of dollars of loans after the eruption of the Asian financial crisis in 1997. [BBC News]

Reuters adds the IMF "has warned that the worst financial crisis since the 1930s Great Depression could inflict lasting economic harm on the world.

The IMF has about $200 billion immediately available to lend to countries in need but can tap other sources. He said the global economy was on the cusp of recession but with quick and forceful action, the spreading crisis could be contained." [Reuters News/Factiva]

The Financial Times reports that European equities collapsed on Friday, left vulnerable after a dramatic late sell-off in New York extended the sustained losing streak on world stock markets. Banks stocks once more faced heavy selling as confidence in the international financial system continued to drain away, taking major indices to fresh 5-year lows.

The New York Times further reports that "Iceland's financial system collapsed Thursday, and analysts said it was probably only a matter of time before the country would have to turn to the IMF for help. Such a move, which would make this small island nation the first sovereign state to fall victim to the credit squeeze that began last year, would require it to accept harsh measures to restore fiscal and monetary stability." [The New York Times]

Meanwhile, The Guardian writes that UK chancellor "Alistair Darling will urge Britain's G7 partners today to consider emulating his emergency bail-out for their banks. The chancellor expects the G7 and the IMF to beef up their early warning systems to prevent future bubbles in financial markets, and to provide a comprehensive response to the credit crunch. 'We want to see these meetings come up with practical action,' a Treasury source said." [The Guardian (UK)]

In a separate piece, Reuters adds that "Japan stands ready to help the International Monetary Fund ride to the rescue of countries struck down by the global credit crisis, Finance Minister Shoichi Nakagawa said...The Nikkei newspaper reported that Japan would propose making trillions of dollars in currency reserves held by Asian and Middle Eastern governments available to support IMF-led bailouts. Japan alone has $995 billion in official foreign currency reserves. China has $2 trillion, the world's largest stockpile." [Reuters News/Factiva]

The Financial Times meanwhile writes that when finance ministers of the world's seven richest nations gather in Washington today, they hope to send the message that they are united in fighting the worst financial crisis in almost a century. [The Financial Times]

In related news, another Reuters piece suggests that "business is booming in the trade finance market as exporters and importers return to a tried and tested form of credit amid the chaos of the financial crisis, bankers in the sector say. Demand for trade finance -- a traditional form of banking dating back to the Middle Ages -- is so strong that some houses say they are turning away business for lack of capacity. But if volumes are up, so is the price, with deals currently offered at 300 basis points over interbank refinancing rates, three times or more the going rate a year ago." And that is now making it hard for developing countries to finance their exports, with Brazil sounding the alarm. Some bankers also fear the high prices could eventually see new business dry up. [Reuters News/Factiva]

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Africa: There Is Hope.
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The Economist writes in this week's edition that "until the past few weeks of global turmoil, Africa's doughty band of boosters were feeling they at last had something to smile about.

After four decades of political and economic stagnation that kept most of their 800m-odd people in poverty and gloom, the continent's 48 sub-Saharan countries have been growing for the past five years at a perky overall rate of 5% or so...

Many basic indices [however] remain grim. Africans' lifespan is still declining, owing largely to the scourge of AIDS, 60% of whose worldwide victims are African.

A recent World Bank paper was guarded as to whether the African surge would last. Most of the quicker growth, it notes, is due to soaring revenues enjoyed by just eight sub-Saharan African countries blessed with oil.

A third of Africa's countries--by far the highest proportion in any continent--are trapped in civil wars or cycles of violent unrest.

Another report, notes the weekly, co-sponsored by the World Bank, gently dissents from the certitudes of the "Washington consensus" that pure free marketry could cure all, and that Africa must just open up to trade, tighten its fiscal strings and sell off the state.

One size in varied Africa does not fit all. The rich world could, for instance, offer time-limited trade preferences.

Other devices could help too. America's Africa Growth and Opportunity Act of 2000 has spurred African exports by dropping American tariffs.

Another promising new mechanism is the Extractive Industries Transparency Initiative, a voluntary code that a score of African countries have adopted, with governments and foreign firms accounting openly for their dealings...

The creation of national savings funds in commodity-flush countries is another good idea. On the farming front, issuing individual land titles, no easy task in a continent where much land is still communally held, is another.

Pragmatism often beats dogma. So Africa has a rare chance to break out of its poverty trap, concludes the weekly...And the rich world, troubled as it is, must never give up in its effort to help the poor one to stand on its own feet." [The Economist/Factiva]

All Africa notes the IMF said on Wednesday that "African economies will not be hit very hard by the major economic downturn. Its experts said the continent will be spared the worst shocks largely because of limited integration in global financial and capital markets.

Aid agencies have, however, cautioned that any cut in donor assistance to poor countries will have a devastating impact in the provision of social services and overall efforts to eradicate poverty.

'The world economy has entered a major downturn after being hit by two very large shocks: a surge in oil and commodity prices and the expanding financial crisis,' IMF economic counselor and research director Olivier Blanchard told journalists during the World Economic Outlook (WEO) report briefing.

The WEO report projects global growth year on year will slow sharply to 3.9 per cent this year from five per cent in 2007, and continue slowing to three per cent next year.

IMF experts said growth in Africa will be lower than previously predicted averaging about six per cent during 2008/09."

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Drug Firms Agree To Invest More In AIDS Research: UN.
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"U.N. Secretary-General Ban Ki-moon said on Thursday that major pharmaceutical firms promised to invest more on researching treatments for the AIDS virus and diagnostic procedures for poorer regions," reports Reuters.

"The companies also agreed to invest more in prevention, including vaccines and pre- and post-exposure prophylaxis, Ban said in a statement issued after he met with top executives at pharmaceutical and diagnostic firms working on AIDS and HIV, the virus that causes it.

'We noted that despite the gains, the epidemic continues to outstrip our best efforts. Only one-third of those who need antiretroviral treatment in low-and middle-income countries are getting it,' he said.

The senior executives Ban and other U.N. officials met with were from 17 companies, including Abbott Labs, Boehringer Ingelheim, GlaxoSmithKline, Pfizer and other top industry players. B

an said the companies agreed to 'invest further in research and development of new HIV-related medicines adapted to resource-limited settings to be used safely in children, adolescents, adults and pregnant women' -- in other words, to try to make drugs available to people in poor environments." [Reuters News/Factiva]

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Six million Ethiopians need emergency aid: charity.
=================================================

"The number of Ethiopians in need of emergency assistance has risen to 6.4 million, the charity Oxfam said on Friday, warning of a disaster if donors did not respond.

"The number of Ethiopians needing emergency assistance has leapt by 40 percent from 4.6 million to 6.4 million people since June," the British organisation said in a statement, quoting UN and Ethiopian government statistics. [Agence France Presse]

The agency said the same time cereal rations to those needing assistance have been reduced by a third because not enough food is reaching the country. The agency called on all donors to respond generously to the worsening crisis as, according to the UN, the total aid effort is currently under-funded to the tune of 260 million U.S. dollars.

The revised numbers of those needing emergency assistance is likely to be a conservative estimate and does not include the 7.2 million Ethiopians so chronically poor that they receive cash or food aid from the government every year. [Xinhua]

Meanwhile, in related news on Ethiopia, Hindu Business Line reports that "India has extended the largest-ever line of credit of $640 million to Ethiopia for greenfield investment in three sugar factories in that geographically strategic country in the African continent, besides putting in place a slew of measures to boost bilateral trade relations.

Talking to Business Lineafter returning from the fifth Ethio-India Joint Trade Committee meeting held in Addis Ababa on October 7, the Minister of State for Commerce and Power, Mr Jairam Ramesh, said India is the second-largest foreign investor as its outward investment commitment to Ethiopia is $3.5 billion. Of this $2 billion is in the agriculture and floriculture sectors. "Indian companies are very active in floriculture, leather and potash mining," he said, adding that areas such as power and information technology have also been identified for heightened cooperation.[Hindu Business Line]

Bilateral trade has reached USD 249 million in 2007, with imports from India accounting for around 96 per cent of the total amount.

"Indian investors were engaged in 349 projects worth over USD 4 billion, which are at different stages. It is estimated that the ongoing projects will create about 26,000 permanent and 121,000 casual jobs," Ethiopian Minister of State for Trade and Industry Ahmed Tusa said.

Currently, India has invested over USD 3.5 billion in Ethiopia in sectors such as floriculture, infrastructure development, agriculture and mining, making India the second largest investor in the African nation. [Reuters India]

=================================================
Also in this Edition; Briefly Noted...
=================================================

UN calls on donors to meet $140 million shortfall in food aid for Zimbabwe. The call from the World Food Programme comes amid a protracted deadlock in power-sharing talks between Robert Mugabe, the president, and Morgan Tsvangirai, the opposition leader whose party yesterday accused the regime of "fiddling while Zimbabwe burns" [Financial Times]

President Viktor A. Yushchenko of Ukraine signed an order on Thursday to dissolve Parliament and hold snap elections, raising new uncertainties about Ukraine's tilt toward the West at a moment when the country has become a focal point of rising tensions with Russia. [New York Times]

Russia's lower house of parliament, the Duma, has approved a raft of measures worth $86bn to assist banks hit by the credit freeze. The government will make $50bn available to banks and firms that need to refinance foreign debt. The rest will be available as loans to banks. [BBC News]

Both Montenegro and Macedonia recognized Kosovo's independence despite opposition from Serbia, which called the moves by its Balkan neighbors a betrayal and expelled the Montenegrin ambassador from Belgrade. [Associated Press Newswires/Factiva]

Serbia on Thursday decided to reinstate all its ambassadors who were withdrawn from countries which recognized Kosovo's independence after it seceded from Belgrade in February, a statement said. The decision came a day after the United Nations General Assembly approved Serbia's proposal to ask the International Court of Justice to rule if Kosovo's unilateral breakaway from Belgrade was in line with international law. [Agence France Presse/Factiva]

Brazil, Mexico, Argentina and Colombia -- the biggest economies in the region -- have all pumped money into the market to shore up flagging national currencies. Several are readying other measures, either individually or within the framework of the G20 group of advanced and developing economies, which is to hold an emergency meeting in Washington on Saturday. [Agence France Presse/Factiva]

President Alvaro Uribe had asked the central bank on Thursday to help protect the economy and free up capital by lifting a deposit required on private foreign debt sought for loans and import financing. [Reuters News/Factiva]

Switzerland's acting finance minister will not travel to the annual meeting of the IMF this weekend due to the turmoil on global financial markets, the government said on Thursday. Switzerland will be represented at the annual meeting of the IMF and World Bank in Washington by Economy Minister Doris Leuthard and SNB President Jean-Pierre Roth. [Reuters News/Factiva]

The World Bank is considering approving a $1.01bn loan to Mexican development bank Sociedad Hipotecaria Federal (SHF), according to a document from the Washington-based multilateral institution.

The project would support the strengthening of Mexico's housing markets by: boosting SHF's financial capacity to develop and consolidate markets for housing finance and to expand access to lower income groups over the medium term; and to improve SHF's technical capacity to increase access to lower income groups over the medium term, the document reads. [Business News Americas/Factiva]

India has extended the largest-ever line of credit of $640 million to Ethiopia for greenfield investment in three sugar factories in that geographically strategic country in the African continent, besides putting in place a slew of measures to boost bilateral trade relations. [Business Line (The Hindu)/Factiva]

The International Finance Corporation has said that it has made its first equity investment in the onshore oil and natural gas drilling sector by providing financing to Punj Lloyd Upstream Limited, reports Economic Times.

The IFC will offer up to 30 million of debt and equity financing to Punj Lloyd Upstream Limited, a subsidiary of Punj Lloyd Limited, a leading Indian engineering and construction company that specializes in the energy and infrastructure sectors. [Global Banking News/Factiva]

---
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Bush: US will work with partners on credit crisis By MARTIN CRUTSINGER, AP Economics Writer
44 minutes ago



WASHINGTON - President Bush met with foreign financial officials Saturday and pledged a global response to the credit crisis that will lead toward a "path of stability and long-term growth."

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Bush announced no new strategies to attack the economic woes circling the globe, stressing instead, "We will do what it takes to resolve the crisis and the world's economy will emerge stronger as a result."

The president spoke in the Rose Garden outside the White House, joined there in a show of solidarity not long after daybreak by finance officials from the G-7 — Japan, Germany, Britain, France, Italy and Canada, in addition to the United States. Treasury Secretary Henry Paulson and Secretary of State Condoleezza Rice also attended.

"The United States has a special role to play in leading the response to this crisis," the president said. "That is why I convened this morning's meeting here at the White House and it is why our government will continue using all the tools at our disposal to resolve this crisis."

He added, "As our nations carry out this plan, we must ensure that the actions of one country do not contradict or undermine the actions of another. In an interconnected world, no nation will gain by driving down the fortunes of another. We are in this together. We will come through it together."

Bush's comments were aimed at avoiding the mistakes that worsened economic conditions during the Great Depression in the 1930s. Then, some nations pursued go-it-alone strategies such as erecting protectionist trade barriers to shield their domestic industries. Those trade barriers ended up only worsening the global downturn.

In the current crisis, Ireland moved to guarantee all bank deposits, a decision that triggered similar actions in Germany and other nations which were concerned that nervous depositors would move their bank accounts to Ireland.

The White House meeting lasted about a half-hour, less than scheduled.

Officials from the Group of 20 countries — which include the wealthiest and the world's biggest developing nations such as China, Brazil and India — planned to attend a meeting Saturday evening that Paulson requested to explain the actions that U.S. and other wealthy nations have taken.

Before that session, Paulson briefed members of the policy-setting board of the 185-nation International Monetary Fund on the actions the U.S. and other countries have taken to get credit flowing again.

"These extraordinary events require a global response and financial officials from around the world are working together, taking action individually and collectively as necessary, to address these challenges," Paulson said. He said that once the crisis was over "we must turn our attention to longer-term reforms to modernize our outdated financial regulatory strucutre and address other weaknesses."

For Bush, it was the 22nd time in 27 days that he has spoken publicly about the financial crisis. Congress heard testimony last week that the retirement accounts of Americans have lost $2 trillion in the past 15 months, and the New York Stock Exchange Dow Jones industrials average plummeted more than 18 percent last week alone, the largest ever in a week.

A wave of selling sent markets lower in several Asian and European nations on Friday, while other exchanges were closed to prevent the same fate.

The stock selloffs stem from fears that banking systems have essentially frozen up around the world — a credit crisis that took hold sharply three weeks ago in the United States and has led to an escalating series of interventions by the administration and Federal Reserve. Officials have also spoken openly of concerns that the United States may be headed for a potentially deep recession.

It was only eight days ago that Congress approved a $700 billion bailout for the financial industry, and the Fed has pumped billions of dollars into the economic system hoping to provide greater access to credit for potential borrowers.

On Friday, Paulson announced the Treasury would begin buying part ownership in American banks, an effort similar to a program tried beginning in the Great Depression of the 1930s.

The administration's decision is aimed at restoring the depleted capital reserves of banks, which have been forced to cut back on loans because they have suffered billions of dollars in losses in the current mortgage meltdown.

The G-7 officials discussed the global economic crisis for three hours on Friday and issued one of the shortest communiques in the history of the group. It pledged to take "all necessary steps to unfreeze credit and money markets" to end the crisis.

Overseas officials also have injected billions of dollars of reserves into their banking systems with little effect so far. As the markets plunged this past week, however, the U.S. and other countries accelerated their efforts.

The G-7 statement endorsed a program to prevent the failure of major banks in each of the countries, unfreeze credit and money markets, bolster capital and deposit insurance programs and get the battered mortgage financing system operating more normally.

It was the meltdown of the subprime mortgage market with cascading defaults that triggered the start of the credit crisis in the United States in August 2007.

While the G-7 group did not endorse all the plans put forward, such as a proposal from Britain that countries guarantee the loans that banks make to each other, the finance ministers said they believed they had agreed on a comprehensive plan that would show results.

The question of how countries can deal with the spreading financial crisis was dominating discussions at the weekend meetings of the 185-nation International Monetary Fund and its sister lending institution, the World Bank.

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