Differences in Rescue Plans of US and UK

As I have been writting earlier, two major countries in the Financial markets: US and UK have applied their rescue plans for financial systems. In US it is Paulson's rescue plan which in general suggest US Treasury buying stakes in nine largest banks , where as in UK it is Brown's £37bn bail-out. As it has been stated by Financial Times, that the US plan is much more generouse than UK's one. It has also been argued that Paulson's plan is very similar to British ,which was announced last week. However, there are significant differences in these two plans. The first and the most crucial difference is that US authorities are kinder to banks than UK ones, in such a way that US preference shares being bought in US pay a 5 per cent dividend, which will rise approximately to 9 per cent after five years. On the other hand, UK's shares will pay at 12 per cent and participating banks will not be able to pay dividends, unlike in US.

Moreover, UK scheme mostly deals with banking system, where as, US is helping financial firms outside the conventioanl banking sector.

Therefore, looking at these differences, one can conclude that US's scheme is more effective, but there are still arguments as both plans have been critisized.

Global Financial Crisis

Global Financial Crisis started in 2008 effected all countries around the world. It started due to high oil prices , which in its turn raised food prices,an global inflation. A substantial credit crisis lead to the bankruptcy of large and well established investment banks as well as commercial banks in various nations around the world,also increased unemployment, and the final outcome is global reccesion. But, as we all know US economy and financial markets have major impact on economies of other countries, hence when US expirienced earlier this year subprime mortgage crisis and declining dollar value, it started to become clear for the US itself and countries around the globe, that the financial and economic crises this time is a seriouse one for the global economy overall. There has been debates in United States, which measures to take , and then after long overviews at variouse rescue plans Paulson's one has been announced to proceed. Hank Paulson is the Treasury Secretary of US and his $700bn financial rescue plan has been argued for and against for some time by the Congress.

At last ,though, Paulson's plan went systematic. Yestarday on Tuesday, 14th of October the US Congress announced that the rescue plan is going to proceed and hopefully will help US financial system, therefore the rest of the world. Almost at the same time , in UK Gordon Brown's bank rescue plan was taking actions with £37bn put into finacial system (BANKS). Also, European Central Banks, injected more than $250bn into financial markets in hope for rescue of the crisis which seems like an endless process.

To conclude, i would like to say that, this blog includes general info about Global Finamcial Crisis and some overview of rescue plans initiated by major countries. All the in-depth information can be found by the hyperlink.

In my following blogs, i will talk about the comparison of US and UK rescue plans and then gradually i will go into Financial Crisis in Russia, its effects, outcomes and plans for survival.