A long weekend. I think these are most of the major developments;
1. Kevin Rudd has guaranteed the deposits in all of Australia’s banks for the next three years. Initial talk of a $20,000 ceiling has been shelved. There is now no cap on the guarantee. He has also applied a government guarantee to the banks’ wholesale funding.
2. The G7 have decided that there are to be ‘no more Lehmans’ – i.e. all ‘strategically important’ financial institutions will be bailed out.
3. The EU goverments revealed the pompously-named ‘Declaration on a concerted European action plan of the Euro Area‘. This includes ; helping banks raise wholesale funding by guaranteeing senior (but not subordinated) debt, buying stakes in troubled banks via preferred equity, guaranteeing deposits, and bailing out troubled institutions.
4. Britain is due to implement this plan almost immediately when it will nationalise at least two of its largest banks – RBS and HBOS – via the issuance of new preferred shares.
5. ‘One cannot talk of nationalisation’ cried German Chancellor, Angela Merkel, as she announced a $500bn nationalisation, bail out, rescue package for German financial institutions.
Key thing to watch today – the fate of Morgan Stanley.