The United States’ Federal Reserve has intervened dramatically to cut base rates by a whopping 75 basis points or 0.75 percent, indicating that it regards recession as a real threat to the US economy. This is the single biggest cut by the Fed in 20 years.

Despite the out-of-synch announcement, the markets are currently less than impressed, regarding it as a panic measure. The White House has also weighed in with the President saying he is considering an even bigger fiscal stimulus than the recently announced $150billion.

London markets have lost around 13 percent of value in only three weeks, heralding a worldwide bear market.

Syntagma has an in-depth analysis of the upcoming recession. Here’s a taster :

As we’ve been saying here in Syntagma for some months, a long, deep worldwide recession now looks more likely than not. Opinions are hardening among key players, principally in America and Britain.

Yesterday, the Wall Street Journal proclaimed : “U.S. warning signs point toward deep recession”.

Now even the insurance companies, or Monolines, that underwrite possible defaults, are also in trouble, with two of the biggest in the U.S. said to be close to Chapter 11 status (a form of bankruptcy protection against creditors).

Clearly, with the Fed and the White House in fighting mode something nasty is moving in the undergrowth.

With an Italian — Fabio Capello — now firmly ensconced as the England football manager (for the time being at least), and the comings and goings between new partners, the London Stock Exchange and its Italian counterpart now an established traffic flow, it seems British-Italian relations have never been better.

Tommaso Padao-Schioppa, Italy’s Finance Minister and policy committee member at the IMF, was guest of honour at the LSE’s Christmas lunch, we hear. As befits a 300-year-old institution, the wine cellar is generally reckoned to be superb.

However, an off note was struck amid this glutinous festive cheer when the Minister scolded Borsa Italiana for not bedding down with NYSE Euronext or the German exchange, Deutche Borse.

The name of the new group’s holding company will be London Stock Exchange — anything else would have downgraded the reputation of the new combine. It is also a fact that over 30 percent of Borsa’s trades come from London based investment banks.

It’s easy to see why the deal made more sense to the Milan bosses than a eurozone one, apparently favoured by the politician. Sr. Padao-Schioppa did concede, however, that mild disapproval of a marriage is often a good incentive to make it work.

Let us hope so.

The Qatar Investment Authority has shelved its attempt to buy the Scandinavian exchange group, OMX.

The plan now is to become the London Stock Exchange’s biggest shareholder by swapping its 10 percent stake in OMX for part of Dubai’s 20 percent holding in the LSE.

The Qataris already hold around 15 percent of the London exchange. A deal is thought to be imminent.

With the LSE in the FTSE 100, it won’t be so easy to take over the company in future, one presumes.

CurrencyTrading.net has an interesting piece titled, 12 Surprising Implications of London’s Replacing New York as the World’s Financial Center by Jessica Hupp.

Here’s just one of the “implications” :

“Financial regulation: After scandals like Enron, the financial industry is more heavily regulated. The Sarbanes-Oxley Act required lots of tightening of financial controls. As a result, it’s less attractive to do business in a country where every transaction is scrutinized.”

Read the whole article here.