german 480 billion euro bailout

While a lot of noise was being made about the american bailout, the German parliament has hastily approved a 480 billion euro (approx. $650 billion) rescue plan for the financial sector, even though there is not as much of a mess as in the USA., (but the economy sure seems to be slowing down to a crawl)
Most of the money is for lending guarantees for banks and some of the money may be spent on buying up risky assets.
A major difference seems to be that banks participating in the plan will have to obey government conditions on executive pay, directions on lending, more government oversight etc.

At the same time the german government does not seem inclined to help bailout the beleagured carmakers in the auto sector.


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Will the banks lend out any of the $125 billion of the government investment

The US government is persuading nine banks to accept $125 billion of government investment.But there is no guarantee of any of the money being used in such a way to ease the liquidity crunch as the government does not seem keen on getting any control of the management side of the bank to dictate how the money is to be spent, as the treasury is not seeking voting stocks for the money it is investing

There seems to be a good chance of at least some banks just hoarding the cash to shore up their balance sheets and the fed may not be able to do anything about it.

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