Changing times

An interesting night in the life of the credit crunch, 2 things leap out and hit me.

First for Merkel to effectively say that no one will lose money in German banks is a big statement. What about the "Hot Money" that flows around, the Euro will go higher today, if it already hasn't and this will increase the pain in the entire Eurozone, where Spain, Italy and Greece are already having problems, partly due to the high level of the Euro.

Secondly, now that the $700Bn in is the bank, people will be looking and realising that the Brits have already "spent" approx £150Bn which equates to $380Bn. But the problem in the US is bigger than here AND the American economy is also 5 times larger than ours if you look at GDP. On that basis, if the problems in the US were as bad as the problems here, the bailout should have been just under $2,000Bn (yes, $2 Trillion). so there is still not enough to take the toxic crap off the banks and let them rebuild.

Another point about how much the bailout is and how much the US Government will pay for it. My understanding is that the US Treasury originally said that they wanted to pay the "Life of Holding" value of the bonds, meaning that although they may have been priced and sold at $100 in the Market today they are probably worth just $5, but the Treasury would buy them, adding all the Bond payments that would be made before the bond was redeemed, so the Banks would get MORE for the highly toxic crap (CDO's etc) than they would for better quality bonds, and the money the banks would get would certainly exceed Book Value. My problem is, the more they pay for these bonds, the smaller the number of bonds they can buy and $700Bn is NOT going to cover it. If I have that wrong, will someone correct me please?

It will be interesting (now there's an understatement) to see what emerges after this, I think the Financial system may be totally different, I don't know how, just that it may.