The near collapse and last-minute buyout of American investment bank Bear Stearns—the ninth-largest investment bank in the world—has sent tremors of recessionist fears around the globe.

In Britain, the pound sterling fell almost 2 percentage points against the euro on the Monday after the Bear Sterns crisis. This is the pound’s greatest one-day fall since Black Wednesday in 1992 and the lowest overall value the pound has hit since 1997.

In the resulting panic, many investors pulled funds from the Halifax Bank of Scotland and other mortgage lenders across Britain. The result was a 13 percent loss in value for the Halifax Bank of Scotland and an increase in mortgage rates across Britain.

The Bank of England pumped £5 billion into British money markets in an attempt to restore confidence in the banking system, but the overall value of Britain’s top 100 companies has already fallen almost 20 percent since last June.

Many British economic experts are calling this the worst financial crisis “in living memory,” the Telegraphreports.

“No one in living memory has ever seen a banking crisis like this. I have worked in the Square Mile for 46 years and the outlook has never looked as bleak,” said David Buick of the spread betting firm Cantor Index.

The roots of Britain’s failing economy are the same as the roots of America’s economic crisis. Enormous national trade deficits combined with historically high levels of consumer debt are undermining the foundations of both nations’ economies. When people borrow money that they cannot pay back, that debt works its way throughout the economy and expresses itself on a national level.

In addition to these problems, however, Britain is experiencing the negative side of having close economic ties to a failing American economy. The currencies of America, the British Commonwealth countries, and Israel are all tied together because of the close economic alliance between those nations. Thus, a major financial crisis in one of these nations (i.e. Bear Sterns in America) will cause a chain reaction that will affect all the others.

Herbert W. Armstrong forecast that a coming crisis in the Western world’s monetary systems—the pound, dollar and shekel—would bring about the collapse of the American and British peoples. The American economy is in crisis and that crisis is spreading to Britain. For more information, read “Speeding to Economic Armageddon.”