NOBEL ECONOMIST WELCOMES US MORTGAGE MOVE - The US government has bailed out two mortgage lenders, saying that Fannie Mae and Freddie Mac are so large and interwoven in the US financial system that a failure of either would create great turmoil in financial markets in the US and around the globe.
Other banks are exposed to their debt, and as the international financial markets are so weak, it had become dangerous for doubts to persist about whether the two banks were viable and would be able to keep up the payments on their massive liabilities.
The European Central Bank has downgraded its forecasts for growth across the euro zone and raised its inflation forecasts. At home, to cope with mounting economic pressure, the Irish Government has moved the budget forward by seven weeks.
Sir Clive Granger, winner of the Nobel Prize for Economics in 2003, welcomed the US mortgage bail-out as a stabilising move. He said people would be less worried about the financial markets as a result. The economist said the problems in the US economy were almost all financial, as US exporters were performing well and many states' economies were doing fine. He said he expected a US recovery in the next two or three years.
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NEWS IN BRIEF AND CURRENCIES - Nationwide, the UK's biggest building society, says it is to merge with its smaller rivals the Derbyshire and Cheshire Building Societies.
Nationwide, the country's second-biggest provider of mortgages, said the tie-ups would create a mutually owned group with assets of £191 billion and £122 billion in retail deposits.
World oil prices rebounded in Asian trading this morning on worries that Hurricane Ike would threaten US production facilities in the Gulf of Mexico.
US crude rose $2.37 dollars to $108.60 a barrel, while Brent North Sea crude surged $2.57 to $106.66. New figures show that activity in the construction sector continued to fall sharply last month.
The Ulster Bank Construction Purchasing Managers' Index recorded 33, slightly better than July's 31.3 but still below the key 50 level which separates growth from contraction.
Ulster Bank chief economist Pat McArdle said the part of the index which measures employment fell to a record low, confirming that the large rise in the August Live Register was probably linked to construction.
But he said the other indices painted a more encouraging picture, with 'tentative signs' that declines in the civil and commercial sectors had levelled off.
On the currency markets, the euro is trading at $1.4398 and 80.38p sterling.
