Market sceptic about banks’ intervention

The market has reacted with scepticism to the co-ordinated intervention
against the credit crunch by some of the world’s most influential central banks.

Although strategists welcomed plans to add about $US60bn to the financial
system, equities fell as the initiative only added to mounting fears that
problems in the financial sector and the global economy could be wider than

Marc Chandler at Brown Brothers
told the Financial Times the underlying issue was ‘that
large financial institutions have only taken about $80bn in writedowns and
losses, while estimates, including by the OECD last month, suggest losses will
mount to something on the magnitude of $300bn’.

The Dow Jones Industrial Average was down 1.2% over the week by midday in New
York on Wednesday, while the S&P 500 was off 1.4%. The FTSE Eurofirst 300
was down 1.4% over the week, while Tokyo’s Nikkei 225 shed 2.8 per cent.

Further reading:

Central banks join to ease liquidity crisis

the story in Financial Times

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