Several university professors all have their own opinion about the rescue plan of the US government. The plan is to invest $700 billion into the banks by buying assets from them. The purpose is to create more clarity in the banking system.
People, who already had shares before the crisis, started to sell these as quickly as they can in order not to lose any more money. According to Professor Jeremy Siegel, this has had more influence than shorting. Shorting is buying equities to sell them afterwards, without really possessing them. Professor Stephen Ryan, on the other hand, blames it to “holding risky assets with too little equity”.
“Will the banking sector become profitable again?” That’s the question where a lot of people would like to have an answer to.Banks will need to look for more investors in order to get extra capital and not keep trusting on their funds. They shouldn’t only search the investors in the own country, but also overseas. For instance in China.
First of all I don’t think that the rescue plan is a bad idea. On the contrary, I think they waited too long to come up with solutions. When the government injects the money into the system, the banks can proceed with their activities and they don’t head towards bankruptcy. Secondly, this is also a good thing for the government itself. They become shareholders. So they receive a voting right and can keep more control. And as soon as the banking sector recovers, the shares will also start to increase, which means profits.
Source: The Financial Times – US academics query banks rescue plan
http://www.ft.com/cms/s/0/d96ec264-8c02-11dd-8a4c-0000779fd18c.html?nclick_check=1
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I also think the rescue plan is a good thing. Maybe it's too late but I hope America will realize that they really have to control their financial system. I hope the shares will start to increase so the government can make some profit.
I think the rescue plan is necessary to regain the confidence of the people. Now they know, the government will help their banks they don’t have to be afraid anymore to lose their saving money. When people trust their banks again, the bank sector and the stock markets will recover from the crises. Without the rescue plan, the financial crises would last still long time.
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