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Is the current proposed bailout/loan call it what you will be good or bad for....

  • 18-11-2010 6:10pm
    #1
    LuckyG
    Registered Users, Registered Users 2 Posts: 81 ✭✭


    Is the current proposed bailout/loan call it what you will, good or bad for bank share prices. and why?

    (might be a good leaving cert paper question!


Comments

  • #2
    whysomoody
    Registered Users, Registered Users 2 Posts: 226 ✭✭whysomoody


    LuckyG wrote: »
    Is the current proposed bailout/loan call it what you will, good or bad for bank share prices. and why?

    (might be a good leaving cert paper question!

    Seems good for a couple of reasons;
    - It creates liquidity in the markets, which might not necessarily raise prices but should at least, in theory, create more real prices if you will.
    - Any bond holders might want to prop the price up to make sure they bank isnt nationalised, giving themselves a buffer (although this is pretty far fetched)
    - Ordinary people will see that things are beginning to normalise - hopefully reinvest their money in deposits first of all which will lower the loan-deposit ratio and maybe start re-investing in the shares.
    - Businesses will start to blossom again making their liklihood of payment go up, increasing the banks profitability.

    All guesses, and plenty bad things could come of it also, but these are just a few thoughts.


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