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Global Financial Crisis Hits Banks in London, Other World Markets


As the financial crisis claimed more victims this week on Wall Street, the rest of the world's markets and banks have been in turmoil. In Britain, 45,000 banking jobs are now in jeopardy. VOA's Mandy Clark looks at the global financial fallout of the American credit crunch.

Another financial titan has fallen in Britain. This time, it is the ailing mortgage giant HBOS which owns Halifax Bank and the Bank of Scotland. Lloyds Bank has agreed to take over HBOS but, reports say, that has put 40,000 jobs on the line.

The buyout comes as fears of a global financial collapse following the heavy losses among some of the world's biggest financial institutions. Wall Street investment bank Lehman Brothers went into bankruptcy this week, and other large investment houses have been sold off or propped up by the U.S. government.

Central banks from the U.S., Japan and the European Union have pumped hundreds of billions of dollars into the banking system to stave off a collapse. Stock markets have suffered sharp losses.

In Russia, trading on the country's main stock exchanges was halted two days this week because of the turmoil. When regulators suspended trading at mid-day Wednesday, Russia's RTS Index of leading stocks had fallen nearly 6.5 percent, adding to its 50 percent drop since June 1.

But Roland Nash, head of research, Renaissance Capital, says Russia should not worry. "It shouldn't have a longer term impact on the Russian economy," he said. "Russian economy is being driven by a lot of factors which is still very very much in place. In that sense Russia has one of the most healthy macro-economies in the world today."

The outlook is less rosy for Britain after new figures show unemployment on the rise. The collapse of Lehman Brothers cost 5,000 jobs in London at its European headquarters.

Taine Randell works in London as a broker. He trades in oil and says while his job is safe, financial positions for others will be scarce.

"The repercussions, I think, with the financial sector is going to be huge," said Randell. "There's not going to be as much money floating around and as a result there's not going to be as many people employed to get it."

But there are those who say that this is just another cycle. Business analyst Robbie Clayton says after the boom, now it is time for the bust, and the world economy will recover.

"You know, for the last 10 years it's been a pretty good ride," he said. "Now things have obviously got to where they are, but it is a cycle and there will be new developments and the show will go on."

But with so much volatility, experts say the final curtain is unlikely to drop on the global credit crunch any time soon.

Vanessa Rossi is an international economic expert and says the Asian economies are under threat.

"I think it is important to see this as a rather big rock that could drop in a pool in Asia and could cause massive ripples all across these economies so I think China will be working very hard so its own reasons to prevent such a slump but it will also be critical for many of these other economies," she said.

On the streets of London's financial sector, many say they have been left in shock and are simply waiting to see what will happen next.


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