The London Stock Exchange yesterday suffered a seizure, blacking out as a result of a computer glitch on a critical day in the world’s stock markets. Across the Atlantic, Wall Street burst into life thanks to the government rescue of Fannie Mae and Freddie Mac, the companies that ultimately fund most American mortgages.
Little over a year ago, New York worried that London was set to leave it behind. These days, it is the City that eyes Wall Street with creeping envy. For America’s handling of the credit crunch has been in stark contrast to Britain’s approach. When the inter-bank markets froze last summer, the US Federal Reserve made cash much more freely available to the banks; the Bank of England, both in word and deed, was more measured. When the economy started to slow, the Fed slashed interest rates despite worldwide concerns about inflation; the Bank has held steady. When Bear Stearns faltered, the Fed orchestrated a weekend firesale; the Bank, the Treasury and the Financial Services Authority spent nearly five months reversing into the nationalisation of Northern Rock. And when the housing market and the financial system were in danger, Washington stepped in to take control of Fannie Mae and Freddie Mac; Downing Street announced a stamp duty holiday. On each occasion, America has chosen pragmatism over principle, decisiveness over dither.
The US and the UK are, of course, very different economies. The policy options available to London and Washington differ too. But America has responded to the financial turmoil in marked contrast to the UK and, so far, with more success: the dollar has strengthened against the pound and the US has avoided recession.
Read it all.
A (London) Times Editorial: Fannie Mae and Freddie Mac and us
The London Stock Exchange yesterday suffered a seizure, blacking out as a result of a computer glitch on a critical day in the world’s stock markets. Across the Atlantic, Wall Street burst into life thanks to the government rescue of Fannie Mae and Freddie Mac, the companies that ultimately fund most American mortgages.
Little over a year ago, New York worried that London was set to leave it behind. These days, it is the City that eyes Wall Street with creeping envy. For America’s handling of the credit crunch has been in stark contrast to Britain’s approach. When the inter-bank markets froze last summer, the US Federal Reserve made cash much more freely available to the banks; the Bank of England, both in word and deed, was more measured. When the economy started to slow, the Fed slashed interest rates despite worldwide concerns about inflation; the Bank has held steady. When Bear Stearns faltered, the Fed orchestrated a weekend firesale; the Bank, the Treasury and the Financial Services Authority spent nearly five months reversing into the nationalisation of Northern Rock. And when the housing market and the financial system were in danger, Washington stepped in to take control of Fannie Mae and Freddie Mac; Downing Street announced a stamp duty holiday. On each occasion, America has chosen pragmatism over principle, decisiveness over dither.
The US and the UK are, of course, very different economies. The policy options available to London and Washington differ too. But America has responded to the financial turmoil in marked contrast to the UK and, so far, with more success: the dollar has strengthened against the pound and the US has avoided recession.
Read it all.