Stocks plunge in dire day for markets

30/09/2008

The financial viability of British banks is under threat, following America's rejection of a bailout plan.

Congress - equivalent to the house of commons in the UK - rejected a £350 billion plan to create a "bad bank" which would buy up toxic assets from financial firms yesterday.

New York's Dow Jones stock index plummeted 777 points, the biggest one-day drop ever, following the news.

The lawmakers had rejected the "bad bank" bill, due to concerns that it would over-burden the taxpayer.

There was also a widespread perception that the general public should not pay for bank executives' mistakes.

However, economists have warned that the stability of the global financial system is now under threat, due to the extreme volatility on the markets and the apparent collapse of investor confidence in banks.

Speaking to the Guardian Peter Morici, professor of business at the University of Maryland, said: "Things are going to get so bad something will have to be done in the next few weeks.

"Banks will sink, credit markets will seize, the economy will go into something much worse than a recession."

The Dow staged a minor recovery earlier today, rising by around 200 points.

Tags; Current UK Economy, Young Family Finances, Retirement Money Problems, Credit Card Lifestyle, Recent Graduate Debt,

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