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Mysteries trail US rescue package

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By Vishal Teckchandani
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3 minute read

Investment experts are puzzled over possible side effects of the US Government's financial rescue package.

Although the United States Government has agreed on an $845 billion financial rescue package, investment experts are debating over what the consequences may be for financial markets.

"What this is going to mean longer-term for banks, financial institutions and Wall Street in particular I do not know," Australian Unity group executive of investments David Bryant said.

"What I think we can absolutely guarantee is that the rules and regulations and conditions under which they operate... will be much more onerous than they are today."

The global press has circulated mixed reports on what could happen to capital markets should the bill pass, including consequences for the US dollar and whether other Governments would make similar packages.

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European financial services firms have suffered greatly over the past fortnight, with Fortis receiving a $20 billion bailout from three Governments, and the sale of United Kingdom lender HBOS to rival Lloyds TSB Group.

"The question is have [European firms] harmed their balance sheets sufficiently to need the same level of support and with the same immediacy or not?" Bryant said.

Lincoln Indicators analyst and chief executive Elio D'Amato said the US deal would not mean all the economy's problems would vanish.

"Shoring up the financial sector always gives a bit more confidence to people... but I do not think we are going to see a rush to the growth levels that were experienced in the US in the last two years," D'Amato said.