"A new financial order" as Europe stuns with €1.5 trillion bank rescue...

The move – unveiled simultaneously in the six states to maximise the show of unity – throws the full weight of the eurozone behind global efforts to stem the crisis. 

The move gave a tremendous boost to bourses across Europe, lifting the Euro Stoxx index by 9.53pc in the biggest one-day rally ever. 

The pan-European plan – totalling over $2 trillion, or £1.17 trillion – completes the third leg of a dramatic restructuring of finance across the Western world. Sovereign states have now absorbed the brunt of the credit risk in half the global economy. 

"The greatest risk is inertia," said French President Nicolas Sarkozy, now basking in glory as the man who refused to give up after the first emergency summit of EU leaders ended in discord. 

"The French state will not let a single bank fail. We have to unblock the interbank market because money has stopped circulating, but it is a reasonable bet that by offering this guarantee, it won't actually be needed," he said, unveiling a French package worth €320bn in guarantees for fresh interbank loans and a €40bn bank rescue fund. More...

See also:

• Europe acts to strengthen (nationalise?) its banks...
• The Depression Reader, a look into Austrian economics...
• Here's 10cc and the Wall Street Shuffle...
• Protest in England: no bailout for the bosses...