Fed Cuts Interest Rate by Half Percentage Point; British Government to Rescue Largest Banks
KIRAN CHETRY, CNN ANCHOR: Well, we are just almost at the top of the hour now and we're following breaking news this morning. The Federal Reserve cutting a key interest rate by a half percentage point. It's part of a joint effort with central banks in Europe and Asia to lower interest rates around the world. That news is sending Dow futures up. Right now 79 points. Comes after a 508-point drop that triggered panic selling in Asia overnight. In Japan, the Nikkei losing more than 9 percent. Tokyo's biggest one-day drop in 21 years. In Hong Kong, the Hang Seng Index closing down more than 8 percent. Trading was suspended in Indonesia after the Jakarta market fell 10 percent. European markets, though, are reacting positively as well to that news. We have London's FTSE average up about 15 right now as well. And Christine Romans is here "Minding Your Business" to put more of this into perspective. You perhaps hit it the best in the break. You said, I have 10 years of news in just this morning alone.</s>CHRISTINE ROMANS, CNN BUSINESS CORRESPONDENT: That's right. In one hour, ten years of news. Well, let's reset the stage then. We had a big stock market selloff in the United States yesterday. That came on the heels of big selloffs overseas. And then overnight you had the British authorities saying that they were going to orchestrate a bailout of British banks and there were concerns across the globe about the health of the banking sector and global recession fears sending Asian stock markets down sharply, sending the European stock markets down sharply, and then exactly an hour ago we got news from the fed that in an unprecedented effort, they were cutting interest rates by half a percentage point to 1.5 percent in a coordinated global rate cut. That is the important part of this. Coordinated global rate cut. It's something that the market has been hoping for over the past few days as a sign of -- of confidence restoring into the marketplace, showing that the fed and global central bankers are doing everything that they possibly can to try to fix this credit crisis and this crisis of confidence, really, that is spreading across the globe. Now, confidence is the key here. Central bankers trying to restore confidence in the international system. And that is something that has been in very, very short supply of late. Yesterday, we heard the fed that it is going to bailout business loans essentially. We know there is that $700 billion bailout package that Congress passed. We know that the fed and the Treasury, Kiran and John, have done just about everything that they can in their power to try to restore some sense of normalcy to the international system. And we also know that Dow Jones Industrial Average over the past five days is down almost 13 percent. And that is a point loss. That has never happened before.</s>CHETRY: It really is staggering when you especially look at your 401(k). But again, we see futures, S&P;, Nasdaq and Dow Jones up right now. We'll see what the day holds.</s>ROMANS: We will see</s>JOHN ROBERTS, CNN ANCHOR: Christine, thanks. The news, the rate cut comes just hours after the British government announced a sweeping plan to bail out its banks. More than $87 billion of taxpayers' money will be used to purchase shares in eight major banks. CNN's Becky Anderson watching the developments in London right now. Becky, what's it looking like over there, and particularly, in light of this coordinated bank rate cut between the U.S. Federal Reserve, Central Bank there in Europe and as well other banks including the Bank of England?</s>BECKY ANDERSON, CNN INTERNATIONAL CORRESPONDENT: John, interesting reaction. Really interesting reaction. A 6 percent drop before that action. And those markets went straight up. They're now just trading slightly lower, but these European markets have liked that coordinated action. And at least we're trading at or around a level point this Wednesday. And the really interesting point was it was that pushed these markets higher. Not this $90 billion bank bailout that the chancellor here, the finance minister here announced this morning before the markets opened. And don't forget that is only 10 percent of what the British government is making available to the financial system. There is another, some $900 billion that they're making available across the money markets in order to inspire some confidence. This is what I've heard, though, from traders today. It's an interesting point. What I think they feel is this. That ultimately these markets have gone higher off the back of that rate cut because they think that's it. Pretty much they think that the government has said we've got nothing else to give you, guys. You sort it out. And at this point most of what they've got is priced into the market and we may -- we may just see the beginnings of a little bit of confidence. Not the green shoes of recovery necessary, but the -- a little bit of confidence coming back into the markets. Let me show you how the newspapers sold this story though this morning. This of course is before the rate cut. "Day of Reckoning" says "The Daily Telegraph." And I've got to say I think that's absolutely spot on this morning. "Day of Reckoning" for the financial markets. "The Independent" newspaper here in the U.K., "50 Billion Pounds Bailout to Save Britain's Bank, But Will It Be Enough to Save Us?" Good question. We're looking at banking stocks up significantly this morning on the back of this bailout and on the back of the rate cut by 50 basis point or half of one percentage points if you don't watch the markets. And "Le Figaro," the French newspaper this morning. "Europe is Engaged in Trying to Work out What You Do to Avoid What is Ultimately a Complete Banking Failure." Those are the headlines. Better day as we move through the session on the back of that rate cut. Gordon Brown, though, let me just leave you with this. What the prime minister said today as they announced this big bailout for the banks of the U.K. He said this, "The global financial system is trekking towards collapse" -- John.</s>ROBERTS: We could certainly use a little bit of good news. Becky Anderson for us this morning. Becky, thanks so much. How will the big interest rate can affect Wall Street? As we wait for that, we're taking a look at what Barack Obama and John McCain said that they would do to shore up your money. The best political team on television breaks down the candidate's plans. And while you're sleep, the British government announced the plan to rescue its largest banks with almost $90 billion. How their plan differs from our own bailout bill. And will it restore investor confidence?