***BREAKING NEWS***BREAKING NEWS*** Germany moves to guarantee personal bank accounts following Irish lead; EU fails to reach consensus on unified financial remedy; Iceland financial sector freezing; Sarkozy announces small business assistance, nationalization of unfinished housing, and govt-backed home loans; Brown shakes up UK government; Australian PM decries era of "extreme capitalism;" American financial problems persist

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The global financial virus that incubated in the United States housing sector and infected Wall Street has burst into a full-blown worldwide epidemic as anxious European governments raced this weekend to innoculate national financial systems in a futile effort to stop the spread of a fatal economic disease.

Toxic assets, or illiquid securities, many originated as subprime mortgages and other consumer credit instruments, insured against default, leveraged to maximize returns regardless of loan outcome, and sold in bundles to banks and investors large and small, foreign and domestic, have poisoned international financial markets like melamine in Chinese powdered milk or pet food. They're everywhere.

On Tuesday, the Republic of Ireland's Taoiseach (prime minister) Brian Cowen announced that the government would guarantee all of its nation's bank deposits. The United Kingdom objected to Ireland's flanking maneuver claiming British investors were rushing to place their savings in Irish banks.

The Austrialian online reported on Saturday that the Greek Finance Minister George Alogoskoufis said the banking system was "completely safe and solvent," although he did not promise a blanket guarantee. The Greek cabinet moved quickly to endorse all bank accounts regardless of size, after Greek depositors began hurriedly withdrawing their savings over the weekend.

Now Germany has pledged government intervention to resuscitate ailing financial markets as Der Spiegel online reports "Europe bids adieu to a common financial crisis approach," splintering any hope of consensus on a European Union fix to the global financial wounds now infecting the Continent and European island states.

French President Nicolas Sarkozy supports a common European Central Bank plan to formulate a unified response to the financial virus now threatening the health of European national economies. German Chancellor Angela Merkel disagrees.

Following Ireland, the German government  today announced it would guarantee the safety of private banking products in an effort to prevent further deterioration of financial markets in Germany, Europe's largest economy.

AP reports Torsten Albig, a spokesperson for the German Finance Ministry, said Germany is pledging $785 billion (568 billion euros) to guarantee the safety of checking and savings accounts as well as certificates of deposit (CDs).

In spite of a European Union (EU) economic summit yesterday, the leaders of France, Germany, Italy, and the United Kingdom (UK) were unable to reach consensus on an EU accord to stop the escalating viral meltdown across Europe as toxic American assets continued to spread across the Atlantic.

Claude Gueant, a leading advisor to the French and EU President Sarkozy, told the AP, ''What is certain and what the citizens of...Europe must know is that their [financial institutions] won't be left in difficulty."

The failure of the EU to forge a consensus on treating the financial virus underscores the varying degrees of national anxiety European governments face at the spread of international economic contagion.

Aside from Sarkozy's call to unity, new economic reports indicate the French Republic is officially in recession and the president announced emergency initiatives to blunt the impact of the global financial illness, including 20 billion euros in small business assistance and a plan to nationalize 30,000 housing units under construction in France as well as to provide increased access to government-backed home loans.

BBC business editor Robert Peston says, "European governments are as dazed and confused by the mayhem in the global banking system as most of the rest of us."

In addition to Ireland and Germany, Iceland confronts a rapidly mutating financial infection following last week's nationalization of Glitnir, the country's third largest bank. That move by Icelandic authorities prompted credit rating agencies to downgrade Iceland's four primary banking institutions and to cut the credit rating of the government of Iceland.

According to the BBC, negotiations are underway in Iceland between the government and trade union representatives to repatriate foreign-invested pension funds and to accept wage restraints. Iceland's inflation rate stands at 14 percent.

Number 10 Downing Street announced Sunday that Gordon Brown was continuing to shake up the prime minister's cabinet including the appointment of long time political foe, and mastermind of Tony Blair's successful bid for power in the 1990s, Peter Mandelson. A former European trade commissioner, Mandelson was named business secretary.

In a mixed political message, a newly released UK poll showed that a plurality of Britons (43%) thought Brown was the best leader to nurse the nation through the current financial sickness compared with only 35% who thought Conservative Party chief, David Cameron, was the best person for that job. Nevertheless, 43% of British respondents claimed they would vote for Conservative Party candidates while only 34% said they intended on voting for Brown's Labour Party in parliamentary elections.

In other European and world power centers, governments were likewise responding to the spreading financial virus. Belgium and Luxembourg were moving to staunch the market bleeding caused by the nationalization of Fortis, the Belgian-Dutch bank after the failure of its Netherlands business.

Kevin Rudd, the Prime Minister of the Commonwealth of Australia, decried the era of "extreme capitalism" and denounced the laissez-faire philosophy of  "greed is good." Rudd is imploring international leaders to construct what Samantha Maiden, The Australian online political editor has described as "a new world order of global financial regulation."

In the United States, the US Congress passed, and President George W. Bush signed into law, a $700 billion bailout bill aimed at keeping Wall Street on life support. Even with the bailout bill's passage, the Dow Jones Industrial Average (DJIA), NASDAQ, S&P 500, and the 10 Year Bond all ended the trading week lower on Friday.

The $700 billion bailout comes after a $200 billion nationalization of mortgagers, Fannie Mae and Freddie Mac, and atop an $85 billion bailout of the American insurance giant, AIG.

The US state of California, the world's tenth largest economy, announced it would seek $7 billion from the federal government to bridge budget deficits and lack of state treasury funds to pay for state and local government services.  Governor Arnold Schwarzenegger (R-CA) told the US Treasury on Thursday that California's cash flow to cover routine operations was crimped by an inability to acquire short-term loans. Expect other US states, such as New York, to follow.

Despite the historic and massive infusion of money, the financial crisis in the states is spreading. AT&T Chairman and CEO Randall Stephenson told the AP that his company was unable to trade any commercial paper last week for terms longer than overnight. Automobile manufacturers General Motors and Ford announced steep declines in the purchase of new cars. And the US unemployment rate shot up to a five year high.

Stock indices across the Asia Pacific region from Hong Kong to Sydney and Tokyo were trading down early Monday at the start of the business week.

Authors Website: http://www.blogger.com/profile/4236373

Authors Bio:
Constance Lavender is an HIV-Positive pseudonymous freelance e-journalist from a little isle off the coast of Jersey; New Jersey, that is...

In the Best spirit of Silence Dogood and Benj. Franklin, Ms. Lavender believes that a free country is premised on a free press.