The financial crisis is now taking major tolls in the European markets. The Wall Street Journal's Market Watch is reporting that the German government found it necessary to step in and provide one of their larger banks, Hypo Real Estate, with a 50 billion euro rescue loan. This seems to be the trend that is happening throughout the world as major banks are seeing their liabilities maturing at a much faster rate then their assets are able to match. With the rescue lines that the governments are supplying, these banks are able to withstand major speculation that investors have. Hypo Real Estate main problem has been a risky investment in their Irish bank, Depfa, a public finance divison. With the major crunch in the credit market, the firm was unable to gain short term loans. It's a major problem throughout the market that firms are not being able to determine the right amount of liquidity needed.
I personally still have mixed feelings on the right way to handle such issues. I understand that if a major bank fails, then it could cause a dominoe effect which has kind of already happened. I just feel that these action are a way of preventing the market from correcting itself.
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