Stock market manipulators (Scum!), tried yesterday to bring down HBOS by spreading a false rumour that HBOS had begged the Bank of England for an emergency loan.
This was vehemently denied by HBOS and Bank of England. However, the damage had been done and the share price fell by 17%; earning shorters a tidy sum.
The FSA said that it would pursue traders guilty of "market abuse".
The trouble is that these warnings come after the damage is done. The Bank of England and FSA need to get their acts together and work in a pro active rather than reactive fashion.
The Bank of England has said that it will double its weekly emergency funding to £10BN. When compared with the pro active approach taken by the Fed, this is a mere drop in the ocean and shows that the Bank of England has yet to "get" what is happening in the markets.
Unsurprisingly the UK's major financial institutions are highly unimpressed by the Bank of England's, and government's, handling of the crisis so far. As such, the chief executives of Halifax Bank of Scotland, Royal Bank of Scotland, Barclays, Lloyds TSB and HSBC have called for a meeting today with Mervyn King (Governor of The Bank of England) for an "exchange of views".
Let us hope that they are able to knock some sense into him.
The BoE, UK government and ECB simply do not "get" this yet.
They need to ditch their tired old mantras about "moral hazard" and inflation worries. These issues are dead and buried for the moment.
When you see your neighbour's house on fire, even if he started it himself, you don't sit back and do nothing. You help him put the fire out, before it reaches your house.
Only large scale co-ordinated efforts by the central banks (BoE/ECB etc), governments, and main banks will stabilise this situation.
Banks need to start lending to each other again; to do this they need to be given a guarantee by BoE/ECB et al that their funding etc will be underwritten. This means BoE et al need to be imaginative, as the Fed and US government has been.
The trouble is, they are simply not up to the job.