US bank Bear Stearns has received  emergency funding following  concerns  that the investment bank, the fifth largest on Wall Street , was about to collapse. JP Morgan Chase is providing the money  for 28 days but with the Federal Reserve's  backing so this is in fact a state handout  with US taxpayers bearing all the risk.   

JP Morgan is also trying to establish  long-term financing for Bear Stearns.

Over one 24 hour period Bear Stearns was taken to the brink of insolvency by a sudden collapse in confidence from its hedge fund clients. Bear Stearns shares were down 46% Friday .The bank is the latest victim of the  global credit crunch which saw the UK Government ' nationalise' the Northern Rock bank in almost identical circumstances and the fear is that many other lenders may also have major funding problems. The banking industry is notorious for trying to conceal its problems from public view so if anything the Bear Stearns bail out looks set to further erode confidence rather than restore it.

Now the US Government is writing Welfare Checks for investment banks expect more lenders to come fiorward for handouts before they go bust.

This week also saw the US economy quietly lose its title of "world's biggest" to the euro zone for the first time as the value of the dollar slumped in currency markets. With China in the ascendant , Americans are going to have to get used to their country regularly coming second or lagging even further behind.

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