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European Markets Calm After Bailout Plan Announcement


Stock prices have been up in Asia in reaction to the Bush administration's request to the U.S. Congress for a $700-billion financial intervention plan to purchase bad debt from American financial institutions. With reaction on the European markets, Tom Rivers in London reports for VOA the major indexes spent most of the day hovering close to the open.

Most of the market euphoria was spent on Friday as many European stock indexes recorded record one-day gains. After the weekend, a more sober, calmer analysis of the situation appears to be taking hold.

While the Asian markets strongly advanced, European trade was more circumspect and subdued.

Many London traders see the U.S. taxpayer-funded bail out plan and efforts by the British government to ban the so-called short-selling of stocks as important means of stemming market bleeding for now, but fragility has not gone away. As Britain's Treasury Secretary Alistair Darling says, a degree of uncertainty remains.

"The banking system is absolutely fundamental to each and every one of us and it is fundamental to the strength of the economy so we do need to take action and it is a difficult time. Nobody would want to find themselves in this position in an ideal world, but this is where we are," he said.

While the U.S. bail out plan is generally being welcomed, many analysts fear that in the long term, the package could burden the American economy as taxpayers are ultimately backing it.

But here, Treasury Secretary Darling says it is the right measure to loosen up the tight credit squeeze being felt globally.

"We have to do everything we can to make sure that we get that stability, to get the banks starting to lend to each other because that is the way to ensure that we can get a better supply of mortgages at prices people can afford that," added Darling. "That is the way in which money comes into businesses."

While European economies slow and recession is predicted in places like Britain, one thing traders here cannot agree on, is whether the U.S. plan will in hindsight be viewed as a measure that brought brief relief or one that proved to be a true economic turning point.

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