Fannie Mae and Freddie Mac received Government support yesterday and all seemed well with the banking world. What a difference a day makes….Lehman Brothers dipped 30% on the news that it may not be able to raise the required funding to cover its losses. The credit crunch has led the bank to raise $6bn to cover write-downs. Lehman’s shares are down more than 90% this year and is it’s the US’s fourth largest investment bank, it too cannot be allowed to fail.

Lehman Brothers has issued a report that states the UK faces a one in three chance of going in to recession during the next two years. Global financial issues caused by the credit crunch, higher mortgage rates and reduced availablility of mortgage deals will finally lead to a slowdown in consumer spending. Adding up all these factors means the prospect of a recession won’t go away. (more…)