16 October 2008

Is the financial deal about to unravel?

Two reasons:

First, inter-bank lending - despite government guarantees - remains severely constipated. At least, so says the current poster-boy, Mr Peston. And, if the banks do not trust each other, the provision of further (or even existing) credit to their retail customers, both companies and individuals, is a non-starter.

Second, the banks (notably Lloyds TSB) appear to be challenging the requirement to buy back the government's preference shares before issuing dividends, a period which might last for five years. The Times appears to think The Treasury has made or will make concessions, whereas The Guardian suggests that the government is holding firm.

Meanwhile the stock market is tanking (again) ...

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