Welcome to European Tribune. It's gone a bit quiet around here these days, but it's still going.
Well, the announcement has apparently tightened the CDS spreads on the banks a lot, so it's now not worth 10bn(?).

According to the Irish Times:

THE GOVERNMENT'S emergency legislation to guarantee the Irish banking system will allow the State to take a stake in any financial institution that receives financial support from the exchequer.

The Bill gives the Minister for Finance wide-ranging powers to protect financial institutions and allows for competition law to be set aside to allow bank mergers, if deemed necessary to protect the stability of the financial system.

by Colman (colman at eurotrib.com) on Wed Oct 1st, 2008 at 06:55:17 AM EST
[ Parent ]
It also made their shares go up, and "tightening their CDS spreads" is a competitive advantage at a time when being able to borrow more cheaply (or at all) on the 3-month interbank market is a matter of life and death for banks.

It was worth €10bn when it was given and results in a reduction of the "cost of capital" which only adds to the €10bn, doesn't subtract from it.

A vivid image of what should exist acts as a surrogate for reality. Pursuit of the image then prevents pursuit of the reality -- John K. Galbraith

by Migeru (migeru at eurotrib dot com) on Wed Oct 1st, 2008 at 06:59:43 AM EST
[ Parent ]


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