Financial Crisis Spreads Globally

Russia, England, and us


Banking's failure is spreading globally and is beginning to echo the crisis that swept across markets in the late 1990s. The difference this time is that America leads the way down.

Russia injected $19.5 billion into its markets, but they'll remain closed until Friday as frightened investors take flight. says a missed payment by a midsize commercial bank yesterday sparked the market closure but not before $800 billion in equity value was wiped out.

England is suffering, too. Wall Street also sold billions in risky securities to willing buyers overseas. Unsurprisingly, their banks are following ours into decline. Lloyds's $22 billion buyout of HBOS, backed by the British government, hints at the severity of the problem. The combined company, now the U.K.'s largest lender, said it would continue current lending and expand when the crisis subsides, Lloyds officials said. It's essentially the same story as the United States: The government steps in to facilitate a takeover to prevent further calamity (memories of Northern Rock presumably apply) as banks without large chunks of deposits and retail operations look for safety among formerly more mundane commercial rivals. (See Wachovia/Morgan Stanley).