Despite the huge sums of money that the european governments are using to stabilize the financial system, the announced reforms remain unclear
As expected, the german government approved its rescue package for german banks in cabinet. At 500 billion euros, the package is even larger than previously expected. With half a trillion euros it is about as comprehensive as the link on /tp/blogs/8/116907. It is topped by the plans of the british government, which wants to spend 633 billion euros and pushes the nationalization of banks. France has also agreed to provide 360 billion, the netherlands 200 billion, and spain and austria 100 billion each. European borsen celebrated with price fireworks that a good two trillion euros of taxpayers’ money is to be injected into the financial system.
The rescue package of the german government has caused a furor at the stock exchanges. Germany’s benchmark dax index closed with the highest daily percentage gain in its history. It climbed 11.4 percent to 5.062 point. Similar situation on other european financial markets due to bailouts. But that does not lift anything yet, it could also only be a flash in the pan, as it was after the link on http://www.Our site/tp/r4/article/28/28769/1.Html was burned down.
At that time, it was not the interim rejection that caused prices to plummet again quickly after a brief rise. There was uncertainty about whether the sum of 700 billion dollars will be enough, and there was disagreement about the content of the package. So today’s "breathe a sigh of relief" must be taken with a grain of salt, as the packages have not yet been decided, and it was also a technical recovery after last week’s crashes. In the end, the dax lost 22 percent of its value during the black week, and 8.4 percent last friday alone. A week ago, a dax at 5000 points was bad news, not good news.
Resistance from the federal states
The planned measures of the federal government still have to pass the parliamentary hurdles and controversy is programmed. Even though the sums have swelled considerably, it is still doubtful that they will be enough to get the crisis under control. After all, all the measures taken so far do not change the bursting real estate bubbles in the u.S., great britain, spain, ireland, denmark… Which led to more and more credit defaults and are rubbing more and more holes in the ground. In addition, a global recession is looming.
There is clear resistance, especially from the federal states, because they are expected to contribute 35% of the costs. Bavarian finance minister erwin huber explained that the countries should not be included in the crisis. The designated leader of the csu and bavarian minister president horst seehofer followed up by declaring that it was a question of a "original task of the federal government". Hamburg and brandenburg are very skeptical, and there is also criticism from hesse.
"We are not going along with this", said mike mohring, chairman of the cdu faction in the thuringian state parliament. The reconstruction of the east was made possible by the rescue package "effectively ended", he told the thuringer allgemeine newspaper. In any case, the five new states have already had to cope with a drastic drop in solidarity pact funds in the coming year.
The resistance is understandable in view of the enormous sum of half a trillion euros in taxpayers’ money that finance minister peer steinbruck wants to use to "to avert damage to the federal republic of germany". He remains largely silent on what conditions will be imposed on the banks for the aid. Steinbruck explained that the banks had not been helped at zero cost. Whoever takes advantage of the equity assistance must commit to reforming the business model, bonus system or severance rules. Dividend payments to shareholders had to be waived. Steinbruck brought up the idea of limiting the number of managers’ salaries to a maximum of 500.000 euros a year should be cut back.
The announced "far-reaching and far-reaching" interventions in the financial system are still nebulous
German chancellor angela merkel wants the plan to include a "first building block for a new financial market interception" see. The government’s package of measures would serve to protect citizens and not the "protection of banking interests", merkel tried to counter all criticism in advance. The package is intended to restart money trading between banks in order to stabilize the financial system. Therefore, the bulk of the money is to consist of bailouts of 400 billion euros, which "does not automatically lead to corresponding expenditures by the federal government" must lead, merkel emphasized. It resorts to the formula already used in the link on /tp/blogs/8/116884. The end is known: instead of 35 billion, the institute alone has a funding requirement of 50 to 100 billion euros by 2009.
The package is intended to provide a maximum of 80 billion euros for direct investments in banks or for the purchase of "problem assets" 20 billion, which is to be secured with a further. For this purpose, the state could acquire shares in the banks. The finance minister is to use the 400 billion euros to ie guarantees for short-term loans between banks. These measures are to be limited until the end of 2009.
The central instrument is to be a special fund to be created by the federal government "financial market stabilization fund" 20 billion, which is intended to revive the flow of funds and strengthen the equity base of the institutions. Not only german banks, insurance companies and pension funds will benefit from it, but all financial institutions operating in germany. The fund will be administered by the federal minister of finance and managed as a special asset of the federal government. Tatsachlich handelt es sich aber um sonderschulden und somit wird die kreative bilanzierung und auslagerung von verlusten, wie sie bisher bei gestrandeten finanzinstituten zu beobachten war, nun von der bundesregierung ubernommen. Because this fund is kept separate from the budget, although it is fed by the state. Despite all this, the goal of presenting a budget without new debt as of 2011 is already being abandoned.
"An appropriate annual fee should be charged for the provision of guarantees", the draft law states that. There is talk of 2%, which is even lower than the inflation rate targeted by the central bank. There shall be no legal right to rescue, the financial sector is also threatened a bit. The finance minister decides "at its own discretion, taking into account the importance of the financial sector entity covered by the stabilization measure for the stability of the financial market, the urgency and the principle of the most effective and economic use of the fund’s resources". Doch das gilt nur fur kleinere institute, denn bedeutsamen banken wurde langst im rahmen der eu-vereinbarungen eine link auf http://www.Our site/tp/r4/article/28/28897/1.Html.
The "far-reaching and drastic" interventions in the financial system, of which merkel speaks, are as little in sight so far as the "crackdown", to "creating structures for a human market economy". However, this could still come in the second building block with which the chancellor aims to reorganize the international financial markets. She wants to work to strengthen the international monetary fund (imf) in its supervision of financial institutions. Better rules for rating agencies should lead to more reliable company ratings. In the government’s view, higher capital requirements and more transparent investment products should make the markets safer.
Although the acceptance is seconded almost from all over europe and incredibly high amounts are used, the success is also doubtful. Die immer groberen summen zeigen nur an, dass auch die locher immer grober geworden sind.
A wave of state aid
Meanwhile, the british government has announced that it will become a major shareholder in one of the country’s most important commercial banks. In contrast to the 633 billion euro rescue package announced last week, the state will not acquire preferred shares, but will take over normal share packages in the royal bank of scotland (rbs), lloyds tsb and hbos for 47 billion euros. Rbs will receive 25 billion euros, making the state the main shareholder with a 60% stake. The banks hbos and lloyds tsb, which are about to merge, need a good 21 billion euros in fresh money together. The state will hold a 40% stake in the new heavyweight bank lloyds/hbos. Nicolas sarkozy has also launched a rescue plan. The financial system in france is to be trimmed with a total of 360 billion euros. After the cabinet meeting, the president declared at a press conference that the state would guarantee the bonds that the banks needed for their refinancing. 320 billion euros will be made available for this purpose. Collateral, such as mortgages, that the european central bank considers insufficient will also be accepted. 40 billion is earmarked as equity aid, which credit institutions and insurance companies will be able to draw on at capital market conditions. Unlike germany, the state must integrate the amounts into the national debt. Sarkozy declared that he would "not to let any bank go bankrupt".
Spain will provide state guarantees for new bank debt up to a maximum of 100 billion euros in 2008, and further reductions are planned for 2009, it was announced in madrid. A sovereign wealth fund of 30 billion euros is also planned, in which the domestic banks should also participate. Austria’s government also set about rescuing the financial system, announcing aid totaling 100 billion euros. The package is to consist of 85 billion euros in guarantees and 15 billion euros in equity support. Italy wants "as much money as necessary" and sweden also announced an extensive program for the next few days.
The eu commission has now formulated guidelines according to which banks may be assisted. The commission is facing an avalanche of notifications of state aid, which must be approved by brussels, because competition in the internal market must not be overridden. According to this agreement, state support must not lead to the affected bank unfairly obtaining attractive new business.
Nebulos declares that misuse of state financial aid should be prevented and that rescued banks must themselves make an appropriate contribution to the cost of the bailout. Government intervention should be behavioral and member states must provide access to bailout programs to all their resident banks and after the bailout there must be a restructuring of the affected banks or the entire sector.