London
19 September 2008
As the financial crisis claimed more victims this week on Wall Street,
the rest of the world's markets and banks have been in turmoil. In
Britain, 45,000 banking jobs are now in jeopardy. VOA's Mandy Clark
looks at the global financial fallout of the American credit crunch.
Another
financial titan has fallen in Britain. This time, it is the ailing
mortgage giant HBOS which owns Halifax Bank and the Bank of Scotland.
Lloyds Bank has agreed to take over HBOS but, reports say, that has put
40,000 jobs on the line.
The buyout comes as fears of a global
financial collapse following the heavy losses among some of the world's
biggest financial institutions. Wall Street investment bank Lehman
Brothers went into bankruptcy this week, and other large investment
houses have been sold off or propped up by the U.S. government.
Central
banks from the U.S., Japan and the European Union have pumped hundreds
of billions of dollars into the banking system to stave off a collapse.
Stock markets have suffered sharp losses.
In Russia, trading on
the country's main stock exchanges was halted two days this week
because of the turmoil. When regulators suspended trading at mid-day
Wednesday, Russia's RTS Index of leading stocks had fallen nearly 6.5
percent, adding to its 50 percent drop since June 1.
But
Roland Nash, head of research, Renaissance Capital, says Russia should
not worry. "It shouldn't have a longer term impact on the Russian
economy," he said. "Russian economy is being driven by a lot of factors
which is still very very much in place. In that sense Russia has one of
the most healthy macro-economies in the world today."
The
outlook is less rosy for Britain after new figures show unemployment on
the rise. The collapse of Lehman Brothers cost 5,000 jobs in
London at its European headquarters.
Taine Randell works in
London as a broker. He trades in oil and says while his job is safe,
financial positions for others will be scarce.
"The
repercussions, I think, with the financial sector is going to be huge,"
said Randell. "There's not going to be as much money floating around
and as a result there's not going to be as many people employed to get
it."
But there are those who say that this is just another
cycle. Business analyst Robbie Clayton says after the boom, now it is
time for the bust, and the world economy will recover.
"You
know, for the last 10 years it's been a pretty good ride," he said.
"Now things have obviously got to where they are, but it is a cycle and
there will be new developments and the show will go on."
But
with so much volatility, experts say the final curtain is unlikely to
drop on the global credit crunch any time soon.
Vanessa Rossi is an
international economic expert and says the Asian economies are under
threat.
"I think it is important to see this as a rather big
rock that could drop in a pool in Asia and could cause massive ripples
all across these economies so I think China will be working very hard
so its own reasons to prevent such a slump but it will also be critical
for many of these other economies," she said.
On the streets
of London's financial sector, many say they have been left in shock and
are simply waiting to see what will happen next.