BANKERS and regulators across the globe are scrambling to contain the growing financial crisis, as a ferocious attack on Macquarie Group punctuated another turbulent sell-off on the Australian sharemarket.
The world's leading central banks, led by the US Federal Reserve, agreed last night to increase available funding to almost a quarter of a trillion dollars to keep money flowing through financial markets, which have been left reeling by the latest turmoil.
After dropping as much as 4 per cent, the All Ordinaries closed 2.5 per cent lower yesterday, led by Macquarie, which slumped more than 23 per cent. The market has plunged 6 per cent so far this week, losing $79 billion since Monday.
Almost 1000 clients of the broker CommSec faced margin calls to force sales yesterday. Earlier this week, the broker recorded about 300 calls a day.
The US Fed, and the central banks of Europe, Japan, Canada and Switzerland, said they would provide up to $US180 billion ($224 billion) for jammed money markets.
Confidence in the US banking system has evaporated to the extent that banks would rather pay the US Government to hold money for them than extend a loan to another lender.
The credit strains are already dampening economic growth.
Telstra said yesterday it would axe 800 largely white-collar jobs. The jobs are mainly in Sydney, Melbourne and Brisbane.
The cut is among the largest mass lay-offs announced by big companies in recent months. Such job losses total 15,598 since the federal election last November, according to the Opposition.
The Deputy Opposition Leader, Julie Bishop, said business confidence in the Government had collapsed to record lows.
The assistant national secretary of the Communications, Electrical and Plumbing Union, Bert Blackburn, said he feared further job losses at Telstra. "The job losses at Telstra have been pretty steady. The 800 announced today is pretty substantial, but more than 50,000 have gone over the last 10 years."
Although the decision was not linked directly to the market turmoil, it was potentially a harbinger of job losses to come if the broader economy weakens alongside the financial system.
The global list of financial mammoths threatened by the turmoil continues to grow. The owner of BankWest, HBOS, confirmed its shotgun marriage to Lloyds TSB yesterday.
There were also unconfirmed reports that Morgan Stanley, one of the last two surviving Wall Street investment banks, was in merger talks with US and Chinese counterparts.
Washington Mutual, a US home lender, is also said to be hunting for a buyer.
In the local market, a debate is raging about the health of Macquarie Group, which owns toll roads, airports, radio stations and wind farms.
Although it has stressed it is in a much stronger position than other investment banks, with plenty of spare cash and no exposure to toxic debt instruments, Macquarie shares have slumped from almost $100 last year to $26.05.
Hugh Giddy, a fund manager at Cannae Capital Partners, said the fall in the bank's shares in the past week had been "remarkable".
"I have always been sceptical of their model," Mr Giddy said. "But when they fall 20 per cent in a day I'm surprised.
"Their revenue may have dried up, but that doesn't mean they will collapse."
