Britannia Radio

A financial crisis that began in the US
is coming to a home near you
As American banks admit the billion-dollar scale
of their losses,
Bank of England Governor warns that the worst
is still to come in Britain
By Sean O'Grady, Economics Editor
Published: 07 November 2007
No one knows where the bodies are buried.
Indeed, no one is quite sure exactly how many bodies there are.
But they are out there,
and there are plenty of them:
underperforming loans, worthless securities
and overvalued assets,
all safely buried well away from the banks' balance sheets.
Buried – but not quite dead.

Increasingly they are surfacing, and these financial zombies are every bit as frightening as any you'll encounter in a horror flick. No less terrifying are the other ghouls haunting the global economy: oil at $97 (£46)a barrel; the price of commodities from copper to wheat at historic highs and a White House seemingly intent on scaring everyone witless with the prospect of a fresh conflagration in the Middle East.

The Governor of the Bank of England has been spooked already, telling us yesterday that: "I think most people expect that we have several more months to get through before the banks reveal all the losses that have occurred... There is always, in a period like this, the possibility that a shock from outside the UK, one from the world economy, might create further fragilities". The "fragilities" have been exposed in some of the world's biggest banks. Their bosses have been the biggest casualties, comforted only by compensation packages running into hundreds of millions of dollars – remarkable even by the standards of Wall Street.

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