Dear listener,

It’s Friday lunch time. And so far today no bank has disappeared and share prices are rising strongly. To call this week a roller coaster would be to make Kingda Ka (http://en.wikipedia.org/wiki/Kingda_Ka - check it out) look like a speed bump on a short drive to the shops.

A week ago if you had said “Lehman Brothers, Merrill Lynch, AIG, and HBOS” it would have been a roll call of major financial companies. By Thursday they had all disappeared or were heading for the door. We were also told that the last two remaining investment banks in the USA – Morgan Stanley and even the mighty Goldman Sachs (nicknamed sacks of gold for its generous bonuses) were seeking urgent talks with takeover partners as share prices – and theirs in particular – plunged around the world.

But on Thursday night the US government indicated it might buy up whatever rubbish debt the banks had left and in the UK the Financial Services Authority announced that “shorting” (see below) stocks in 29 financial companies would be banned from midnight until 16 January. The USA also banned it until 2 October. Shorting has been blamed by some for the extreme movements in share prices. At the same time another £100bn was found by governments around the world to make sure that banks could carry on borrowing. Phew. As a result, the FTSE index of the 100 biggest companies listed in London rose by 5% within minutes of opening and, as I write, is almost 8% up.

** (yes it’s the return of the asterisks to show the items in the programme) So is the credit crunch over?

** In the UK the big news this week is that Lloyds TSB is taking over Halifax Bank of Scotland (HBOS). It will create a mega-bank, bigger than any of its High Street rivals. Normally such a deal would be blocked by the competition authorities – as they did when Lloyds TSB wanted to take over Abbey in 2001. So why has this deal been allowed? What does it mean for customers of the two banks? Will shareholders get a say in the deal? And what effect will it have on the mortgages and savings of everyone else?

** If a UK bank did fail how safe is your money? Many listeners have emailed us asking how the rule which guarantees the first £35,000 actually works. Joint accounts, several accounts in one bank, several accounts in different banks, savings and mortgage with the same bank. And so on. We elucidate.

** Away from high finance, people aged 60 or more have just two weeks to claim help with council tax and their income before tough new rules cut the backdating from 12 months to three. We talk to the government minister who made that decision. And he makes a remarkable admission.

We’ll try to squeeze all that into Money Box on Saturday at noon and repeated on Sunday at nine pm. And there’ll be a podcast, Have your Say, lots of links, previous programmes, transcripts, and loads of other stuff on our website bbc.co.uk/moneybox.

Best wishes,

Paul

Don’t forget the programme taster on BBC Breakfast between quarter to nine and nine o’clock. If you miss it, you can watch it on the web. On Wednesday you will also be able to see Samantha Washington’s weekly round up of the money headlines since we were on air.

Shorting
If you think a share will rise in price you buy it now and then sell it later for a profit. But what if you think a share will go down in price? How can you make money from that? The answer is shorting. Here is how it works. You borrow the share from someone who owns one, usually a big pension or investment fund which holds shares in everything. You then agree to sell that share to someone else at a future date but at today’s price. Obviously they have to believe the price will rise rather than fall. When that date arrives you return the share you borrowed, buy another share on the market at the current price and sell it to the other person at the price agreed originally. If the share has fallen in price you make a profit. But if the share has risen in price you still have to honour the deal. Either way you have to pay the costs of dealing and the fee for borrowing the share in the first place. “Naked shorting” does away with the complication – and expense – of borrowing the share before you agree to sell it. Naked shorting is illegal. But it still goes on.

e-mail Paul Lewis