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PHILIP LASKER: Wall Street may have its bailout package, but global equity markets remain unconvinced.
The Europeans have been trying to co-ordinate their approach to the crisis.
But Germany appears to have undermined it with a bailout package for its banks.
Andrew Robertson reports.
ANDREW ROBERTSON: Another week, another sell off, as share market investors continue to vote with their feet.
PETER SWITZER, ECONOMIST: The fear of the economic implication of this financial mess is going to look bigger than most people expected.
ANDREW ROBERTSON: The Australian stock market shed another 3.3 per cent today, albeit on thin trading because of the public holiday in Sydney.
PETER SWITZER: People are starting to say that this economic collapse around the world is going to be a lot deeper and a lot longer than we expected say six months ago.
ANDREW ROBERTSON: Which is why European leaders have been meeting in Paris to devise a united plan to shore up the increasing number of EU financial institutions teetering on the edge.
A plan which looks to have come unstuck with the unilateral action of German Chancellor Angela Merkel.
ANGELA MERKEL, GERMAN CHANCELLOR (translated): We would like to tell the people their savings are safe, the Federal Government is vouching for that.
ANDREW ROBERTSON: Ms Merkel's comments were designed to calm the German public's nerves as her government negotiates a $60 billion rescue package for one of her country's biggest property lenders, Hypo credit.
But a government guarantee on deposits has the potential to cause a run on banks all over Europe as depositors move their money to Germany.
Other countries may be forced to follow the German lead.
ALISTAIR DARLING, CHANCELLOR OF THE EXCHEQUER: We will do whatever it takes to stabilise the banking system because that is critical to supporting businesses, to helping people, to helping jobs. It's absolutely critical.
ANDREW ROBERTSON: The Belgian banking system has been stabilised. For now, with French giant, BNP Paribas, agreeing to rescue Belgium's biggest bank, Fortis.
Source: Lateline Business
