If consumer confidence were to decline in the same way that the confidence between banks has, then the economies of many countries through the world could be placed in serious jeapardy. That is why this week the Government of ireland has taken the unprecedented step of giving an unlimited guarantee to the savings of bank customers. That move, while reassuring for savers in ireland is thought to breach EU law and may yet be revoked to its anti-competitive nature. In the UK today the guarantee offered on savings in UK banks was raised in the hope of easing saver's fears.

 

The rescue plan proposed by the US Government looks like finally being accepted after a revised form was approved by the Senate and now just faces a vote today in the House of Representatives. It looks like the House will aprove the plan, given that shhare value in the US are already recovering in the expectation that the bail-out will be adopted. There are many citizens who still object to the plan, fearing that higher taxation will be required to fnd the move. The issue is complicated and the implication of doing nothing and allowing the markets to re-adjust themselves is a option most experts believe to be a flawed one.

 

All of these moves are likely to relieve some tension in the markets but it will require several months of relative calm before banking institutions can start to rebuild confidence in themsleves and allow investment and lending to resume to the higher levels requirement and economies to regain some growth.