According to the Business Mirror (October 7, 2008) after the United States congress passed the law last week creating the $700-billion economic package, the US stock market fell significantly. The $700 bailout is characterized as an economic rescue packaged for the falling banking/credit sector.
The bailout bill would allow the Federal government to purchase, insure, and sell troubled assets from financial institutions to stabilize and prevent disruption in the economy and financial system.
The purpose of this rescue package is to clean up the balance sheets of many banks. The banks will have an infusion of cash to carry on their business as best they can. Its purpose is also to restore stability to the United States financial system.
Its short term positive impact to keep the credit and housing market from sinking any deeper. It will put a short term $250 billion into the banking sector for them to be able to continue to stay in business.
In UK’s $87.5B bailout, according to the Business Mirror (October 8, 2008), half hour before markets opened Wednesday, the Treasury said it would be investing up to 50 billion euros ($87.5 billion) in exchange for preferences shares in eight of the country’s largest banks and building societies.
The rescue plan comes a day after British bank’s stock prices a plummeted on investor fears that they wouldn’t be able to get through the global financial turmoil without help. That is why if the government wouldn’t do it, they will run the risk that those banks will stop lending to each other and if they don’t lend to each other, then they won’t lend to the people. The rescue plan marks the British proud banking sector, which until this week seemed to be more immune to the global financial crisis than America’s financial problem.
Its short term is to facilitate borrowing and help to free up credit markets. Under the expansion, it will make at least 200 billion euros ($350 billion) worth of three-month loans available to the country’s banks. This will make prices stabilize and recover in early trading.
Sources:
Philippine Daily Inquirer. A14. Talk of the Town. A14. Sunday Oct. 5, 08
Business Mirror. VOL 3. NO. 263. B8. Wednesday, October 8, 2008
Business Mirror. VOL 3. NO. 262. B8. Tuesday, October 7, 2008
Business Mirror. VOL 3. NO. 202. October 7, 2008
http://www.associatedcontent.com
Subscribe to:
Post Comments (Atom)
No comments:
Post a Comment