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Insights from the UK and beyond

Is RBS chief Stephen Hester worth £9.6m?

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As chief executive for a company that is 70 percent owned by the government, a 9.6 million pounds pay package is quite a tidy sum.

It is a package that makes Royal Bank of Scotland chief executive Stephen Hester almost as well as paid as the Real Madrid-bound Cristiano Ronaldo.

True the package has caveats – it is dependent on targets including shareholder return and absolute share performance – and is line with other British banking chiefs.

But in these more frugal post-global downturn times does that make it right? In trying to get itself shipshape, RBS has slashed over 15,000 jobs as it received its £20 billion pounds government bailout.

Late payments send small businesses to the wall

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By clamping down on credit, Britain’s newly cautious banks are making collapse almost inevitable for many small to medium enterprise (SMEs) who need a financial cushion now, more than ever, as suppliers and customers struggle to pay bills as the economic downturn bites.

Small businesses in Britain, which employ over half of the private sector workforce and annually generate some 3 trillion pounds, typically depend on loans for working capital to tide them over during lean spells.

from Global Investing:

And the next Iceland is…

If there's one thing you don't want to be, it's the next Iceland.

Since its currency, colossally indebted banking sector and economy collapsed in spectacular fashion in October, the country has become a byword for an economy that has truly hit the rocks.

Within weeks, banking problems and currency falls meant Hungary was being hyped as a "second Iceland", at least until a joint International Monetary Fund and European Union rescue package restored some stability.

from MacroScope:

A path strewn with difficulties

An old Chinese proverb states that it is better to take many small steps in the right direction than make a giant leap and fall back. Judging by the number of bank lending initiatives announced over the past three months, British policymakers are taking this to heart.

On Monday, Britain announced no fewer than eight measures to kickstart lending in its credit-starved economy. Despite pouring 37 billion pounds of public money into major banks last October and pledging hundreds of billions more in guarantees, the government had to admit it needed to take more credit risk off banks' books.

Moneyspeak: Of donkeys and carrots and shock and awe

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sadtrader.jpgHere are just a few of the memorable quotes to emerge from the credit crisis:

If you would like to contribute please send us your own selection in the comments box below, with a link to where you found the quotes.

PRAISE FROM THIS YEAR’S NOBEL ECONOMIC PRIZE WINNER

“The British government went straight to the heart of the problem and moved to address it with stunning speed. Has Gordon Brown saved the world financial system?” – Paul Krugman.

Will the bank package work?

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creditcrunch.jpgThey were widely accused of dithering earlier this week but Gordon Brown and Chancellor Alistair Darling have now finally caught up with events and have tried for the first time to overtake them by unveiling a 50-billion pound rescue package for the banks.

The aim is to bolster their balance sheets, increase confidence in them and get them lending again so ordinary financial life can start anew.

At last — decisive action

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blurry-screen-traders2008.jpgNewspapers generally praised the government move to shore up the banks, saying that whatever the prospects for the success of the “stability and reconstruction plan,” to have done nothing would have been infinitely worse.

They noted how fleeting the effect of the far larger U.S. bank bailout has been so far and called for the UK plan to be accompanied by cuts in interest rates by the Bank of England and concerted action on an international scale.

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