creditcrunchnews

Due to fear that it’s now believed the financial crisis is far from over, stock markets have fallen around the world today.

Markets across Europe sharply fell while in London, the FTSE 100 index hit a six year low. In the US, the DOW Jones index fell below 7,000 points, which hasn’t been seen since October 1997.

AIG Bailout

The main reason share prices fell was due to lack of confidence caused by the Insurance giant AIG showing a record loss of $62 billion and as a result needed a $30 billion bailout by the US government.

The loss was from the last three months of 2008 which is the biggest quarterly loss made in history. AIG has already received $150 billion in financial support, which is the biggest bailout for a US corporation so far in the economic crisis. The US government has been forced to reassess this rescue package as the loss announced today put the company’s future in the balance, meaning the government has had to give a further $30 billion to avoid US and worldwide catastrophe.

HSBC Raising Funds

The other reason the markets suffered from lack of confidence was after the news that one of the world’s biggest banks, HSBC was attempting to raise £12.5 billion. This news has shaken the finance world as HSBC was thought to be one of the world’s strongest banks. The bank is doing this by issuing and selling more shares, with the revenue made from this expected to try to sort out its balance sheet along with helping it grow through targeted acquisitions. Pre tax profits for HSBC in 2008 were down by 62% on the previous year largely due to the writing down of US assets by around $10 billion.

Asia

Things weren’t much better in Asia, with the Hang Seng index in Hong Kong down 3.9% and the Nikkei index in Japan down 3.8% on close.

At first it was thought by many economic experts that Asian countries like China could remain unaffected by the Credit Crunch and could even prosper, however, now concern is growing that Asian economies are too dependent on exports to the West and with rapid reduction in demand for products in the US & Europe, Asian economies could be in serious trouble.