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9 Oct, 2008 03:35

Britain bails out its banks as Medvedev calls for change to global financial architecture

Every person in Britain will in effect pay 2 thousand dollars to the nation's banks in an unprecedented government scheme to prevent their collapse. The $100 Billion injection comes as 7 world economies coordinate an emergency response to the financial cr

Economists warn there are no guarantees taxpayers will get their money back. But a defiant Prime Minister, Gordon Brown, insisted the injection will keep the public supplied with mortgages and loans, they'll be 'fully rewarded' when share prices rise, and foreign governments will follow his lead.

“The move will capitalize our banks to the tune of 50 billion pounds, and we've also done something other countries I believe will follow very soon, and that is provide medium-term financing up to 250 billion pounds, guaranteed by the Treasury.”

Within hours the Federal Reserve, European Central Bank, Bank of Canada, England, Sweden, Switzerland and China cut interest rates, in a bid to kickstart spending. Russia's President Medvedev said global financial institutions had been discredited. He called for new organizations to replace the International Monetary Fund and WTO.

“We saw the inefficiency of a unipolar economic model. Its pillars the IMF and the World Trade Organization have lost a lot of their their credibility. To address these problems Russia proposes changing the global financial architecture, to review the role of existing institutions and create new ones.”

That comes days after the US passed a $700 Billion bailout, amid criticism that the public is backing banks that are criminally negligent. On Tuesday Russia lent its banks another $36 Billion to guarantee lending. It’s in talks to loan $5 Billion to Iceland, which claims it’s “virtually bankrupt.”

More European governments are likely to announce massive bank bailouts this week.