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Tuesday, 7 October 2008

So Iceland banks are going down, my prediction was close.

Another Monday another deeper crisis, or chaos to be more accurate.

Remember chaos theory? Well someone needs to try and work out the chaos theory here and NOW would be good, give the hapless politicians and bankers a steer and hopefully we can come out the other side.

But of course nobody truly knows now what is going on.

"Astonishing" is a well hackneyed word, at this moment it seems a trifle underwhelming.

Each day brings news of bigger and wilder speculation, more fear and collapse.

Time for cool heads at international and governmental level. Will the UK Governments announcement at its pre 8am, 8th October press conference, be a big step forward or back.

My prediction is the Bank and government will collectively say the following......

1). All retail saving deposits will be GUARANTEED for 24 months.

2). 1% off base rates to bring down LIBOR.

3). RBS will get partly nationalised.

4). Bank of England will increase SLS scheme and liquidity for banks beyond overnight (ie underpin 3 month money) and buy toxic assets from all UK banks.

The hope being that "runs" on banks slow and stop. The hope being that Icesave's failure is not a forerunner of UK bank runs. The hope being that credit markets ease and banks lend once again.

If you are a small business; read my earlier blogs; get your tin hats on and focus on YOUR business not this huge global theatre.

keith

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