The First Glimmers of Optimism

Your daily TED update: 457bp. Just to put things in perspective, a little, on a day when European and -- surely -- US stock markets are going to rise a lot. But I do think that the optimism (or retreat of utter pessimism) is justified, if the UK's plan is more generally adopted across Europe and the US.

Robert Peston has a nice summary of the details: not only are there huge equity injections into banks, alongside a promise of unlimited short-term liquidity, but the UK government is forcing the banks to lend at 2007 levels, not only to each other but into the real economy. And the total capital being raised today just in the UK has reached an astonishing £50 billion.

I was right about the pound: all that money flowing into the UK has helped it rally sharply this morning, from $1.70 up to $1.74. That's great news: a vote of confidence in the UK's plan, which should make it much easier for other countries to follow suit.

Also in good news: the Morgan Stanley-MUFG is going ahead, on revised terms.

To be clear: none of this means that we're not entering the worst recession of our lifetimes. Corporate earnings are going to fall, and the more leveraged your company is, the more pain it's going to be in. Many stocks will grind lower from their present levels as the real economy bites. But I am hopeful, this Monday morning, that the days of broad-based stock-market plunges are behind us -- or at least that they can be, if the rest of the developed world follows the UK's lead.

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