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Global Markets Hurting

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The Associated Press

Published: November 28, 2008

LONDON - The U.S. government's recent decision to save banking giant Citigroup Inc. may ultimately be remembered as the last high-profile bank rescue in the great financial crisis of 2008, but that doesn't mean it's business as usual in global markets.

Even though few analysts expect another major banking group to collapse or require a bailout of similar scale, banks, particularly in Europe and the United States, remain reluctant to lend to one another or to businesses and consumers.

The banks are spooked by recent months' events, and may be preparing for worse to come in commerce and industry. It's clear that the liquidity crunch, combined with fearful consumers' reluctance to spend, could spell doom for many businesses and feed a spiraling global economic crisis.

Though stock markets around the world have rallied for four consecutive days in the wake of the Citibank bailout, credit markets remain clogged. Hard-pressed businesses, particularly in the retail sector, urgently need working capital to see them through the tough times ahead.

"The eye of the storm happened last month but as we all know storms can last a long time," said Neil Mellor, an analyst at Bank of New York Mellon.

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