The FTSE lost £47.7bn today after HSBC issued a £12.5bn rights issue to the market and shareholders to help generate cash to shore up its balance sheet. HSBC were one of the least affected banks of the current financial crisis, which has the market worried about the whole of UK PLC.
The FTSE now sits below the value it was at before Labour came to power in 1997, closing at 3,625. The DOW has followed suit and has dipped below 7,000 for the first time since 1997.
The Bank of England will meet again this week to make a decision about interest rates. It is likely that rates will be cut further. Such a move might be designed to encourage lending but it seems the banks still do not have sufficient capital to kick start another lending splurge. Plan A has failed, we need a Plan B.
Whilst this has been going on Gordon Brown has set off for his visit with President Obama. So far, the media are predicting that the PM will get a luke-warm reception. I personally think that President Obama is convinced that the PM will be out of a job after the next election and is playing exactly the same card Gordon dealt George W Bush in his final year by ensuring their "relationship" not appear too friendly, to avoid alienating his successor.