The period of financial tense

The UK encountered its first bank run in more than a century in September 2007 when it became clear to the regulators that Northern Rock was in trouble. By February 2008, the bank was nationalised as a temporary measure.

Whilst some argue that tax payers’ money is at stake, Chancellor Alistair Darling explained "It is better for the Government to hold on to Northern Rock for a temporary period and as and when market conditions improve the value of Northern Rock will grow and therefore the taxpayer will gain."

But did the market improve?

A year has moved on since Northern Rock and the global financial market continues to face severe meltdown:

• Bear Sterns disappeared from the scene as the US investment bank being snapped-up by JP Morgan.
• Freddie Mac and Fanny Mae, the two firms which own or guarantee about $5.3 trillion (£2.7 trillion) worth of home loans - more than half the outstanding mortgages in the US was rescued by the US government.
• By mid-September 2008, Lehman Brothers, the 158-years old Wall Street institution filed for bankruptcy protection, leaving thousands of job losses.
• At the same time, Merrill Lynch, worried being the next bank losing the confidence of investors, was acquired by Bank of America.
• US regulators moved in and shut down Washington Mutual (WaMu), one of the largest savings and loan institutions in the US. The bank was immediately sold to JPMorgan Chase for $1.9bn.

This morning, the headline dropped another ‘shocking’ news, sending the next wave of financial tense to the global market: Bradford and Bingley, UK mortgage lender is expected to be nationalised.

At the point of writing this entry, US is still making significant progress in negotiating for a $700bn rescue plan – a tentative deal which authorised the government to buy up to $700bn of troubled assets from financial institutions.

But is this the end of the problem?