Hi Myra,
I believe it will be temporary as the current situation is still not all that healthy. Once the euphoria is over and everybody can see the woods for the champagne glasses, they will realize that the bailout is only as good as the money that was used. The money is being pumped into the system and the banks will go back to lending, which will take the money back out of the system and we're back to squara one, unless the bank makes credit more difficult (or more expensive) to get. This being the case we would be in a similar situation where we are now where few can get, or afford credit, and the credit market will be much smaller, thus reducing profits etc. etc.
When I was a kid my mother said to me that the lending companies only lend to rich people, those people who don't really need it. It has always been that way in a healthy market. You lend and are guaranteed of your return. If we are to believe what the banks say, the banks lent to all the poor people and got screwed.
I posted :
http://www.projectavalon.net/forum/s...ead.php?t=5195
It's my reasoning about nationalizing banks, which basically has just come to pass in Europe. Today George Bush will inform the public what he will do with the first $250 billion of the $700 b. Will it be for his friends' banks? Will it go to AIG who as already received over $1 trillion? Let's wait and see.
Best regards,
Steve
Quote:
Originally Posted by Myra
Hi Steve, just wondering, do you think the rise in the Stock Market will only be temporary because of this? I'm asking because I don't know a lot about how the Stock Market works, I'm sure you know much more than me.
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