Word: panic
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...savers at British bank Northern Rock, the days of worry may be waning. But it took a bold intervention by the U.K government to accomplish. Hoping to stem depositors' panic about the Northern Rock's solvency after it announced last week that it had requested an emergency line of credit from the Bank of England (lengthy lines of customers waiting to withdraw their savings have been a frequent sight outside Northern Rock branches for days), Alistair Darling, Britain's Chancellor of the Exchequer announced yesterday that the government itself would guarantee the bank's customers' money in the (very unlikely...
...Until Monday's grand gesture, the more the authorities tried to sooth, it seemed, the greater the panic. With no sign of the run on Northern Rock ending - savers have so far yanked out well over $4 billion - the panic began to spread. Alliance & Leicester's stock plummeted by almost a third on Monday despite a statement insisting its business was solid; shares in Bradford & Bingley dropped by 15%. Desperate to restore order, the U.K. Treasury put its own money (meaning the public's money) down. "I want to put the matter beyond doubt," Darling said. Customers' cash held...
...panic? Late Thursday, it emerged that the Bank of England had agreed emergency credit for Northern Rock, Britain's fifth-largest mortgage provider and the U.K.'s first bank to be left reeling from the global credit crunch. Jitters in the credit markets were triggered by the collapse of a U.S. subprime mortgage sector built on lending to home buyers with poor credit histories. With that risky debt having been spliced, repackaged and flogged to banks around the world, financial institutions are less keen to lend each other cash. And when they do, they're charging each other more...
Sophisticated investors are well aware of the opportunities presented by the current volatility. For example, amid the recent panic, the yields available on the corporate bonds of some companies with good prospects have shot up alongside those of weaker firms. Many investors who had stayed on the sidelines for some time, given the lofty valuations of stocks and corporate bonds, have now begun to take the opportunity to add selectively to their portfolios. It is likely that market turbulence will continue to test the discernment and fortitude of investors. Whether and how quickly the large pools of Asian capital rise...
...solutions. The general comes to this moment more optimistic than the ambassador, which is why Crocker should be listened to more closely. When I asked Crocker directly, "What do we do now?" he laughed and said, "Well, I always say, 'When they're coming over the wire ... don't panic.'" Someone needs to ask him that same question under oath...