Russian banks get $36 BLN shot in the arm

Russia Today, October 8, 2008, 0:44

The Russian government will inject an additional $US 36 BLN into the country's financial sector to prevent a major crisis. New measures to prop up the banking system come a day after markets suffered their worst-ever day of trading.

Earlier, more than 150 billion dollars has already been allocated, however, the situation is still extremely volatile.

The Russian government continues to support the economy by creating additional measures and injecting liquidity.

"The government is allocating loans to banks, worth a total of 950 Billion rubles ($US 36 BLN) for a period of at least five years. This is the first measure to prop up the country's banking system," President Medvedev said Tuesday.

Finance Minister Aleksey Kudrin echoed President Medvedev:

"This is a preventative measure. It is designed to support the banking system and to guarantee the robustness of the Russian financial system."

Noting the fears pervading global financial markets the Minister added;

"We can see what's going on in the banking sectors in other countries. We need to preempt events related to the robustness of some of our own banks and we've taken these measures,"

"This decision is not just intended to inject liquidity into the banking system - we're injecting enough of that - but it is designed to strengthen the capital of Russian banks,"

"It will improve the performance of those banks, give them enough capital, enable them to issue loans. It will broaden even further their opportunities to lend to the real sector, for securities trading,"

Sberbank and VTB will be allocated 500 billion rubles and 200 billion rubles, respectively.  Russia’s agriculture bank, Rosselkhozbank, will receive a further 25 Billion Rubles. The funding will come from Vnesheconombank in the form of 5 year loans.

Meanwhile, Russia’s main stock indices - RTS and MICEX - have reached their lowest levels in four years. After trading was suspended, both indexes started with a good rally of around 3 percent. But in a little while the indexes were down again.

Investors say this volatility will remain in the future prompting fears among investors and ordinary people.

Market plunge drives traders to despair

Russia Today, October 7, 2008, 16:12

Russia's stock markets have opened slightly up following their suspension on Tuesday morning. But while they are in for another tough day, Wall Street has seen the Dow Jones sink to its lowest point in years. Monday saw stocks take their most brutal one-day beating in a decade.

They continued to tumble despite predictions they would rise off the back of emergency measures in Washington and Europe.

Aiming to tackle the tough situation in the Russian market, President Dmitry Medvedev has announced that 950 billion roubles (about $US 36 billion) will be given to key banks for five years. He has ordered amendments to be made in laws which regulate rules of recovering debts.

The Dow Jones: finding a scapegoat

The Dow Jones dipped by 800 points below the 10,000 mark, and despite rallying slightly towards closing, it’s a gloomy day at the New York Stock Exchange. Traders abandoned the NYSE temple visually defeated - ties undone, they ran from the press crews staked outside.

The panic of the last few weeks has taken away any feeling of certainty even amongst colleagues. Even the 700-billion dollar bailout plan did not seem to give Wall Street the green light it had been hoping for.

Amidst the chaos, some tried to boost pubic morale. But the backdrop is by this point too big to be ignored.

Average Americans accuse the financial circles of “criminal negligence”. This is a feeling resonating across the States - from downtown New York to the political pastures of Washington DC.

But while officials look for scapegoats in gilded skyscrapers, and American idols such as American Express and Citigroup take staggering daily blows, for the public it is all about the numbers.

Practical jokers outside Wall Street drink champagne and wave wads of fake dollars: “Thank you taxpayers, we got it,” they shout. “This is the bailout, we got the money from the federal government”.

This is what the CEOs might be feeling about it. Despite theatrics, these people brought the public's fear into the daylight. And as the so-called Mr Monopolys and casino capitalists were leaving for home, only the tourists were not thinking of asking them what exactly they are driving for.